Image source: freepik

TikTok has taken the world by storm since its conception in 2016. Today, over a billion people across the globe use the app. 

TikTok was the most downloaded mobile app in 2022, according to Visual Capitalist, with 672 million people installing the app, beating out Facebook, Instagram, and WhatsApp.

What began originally as a social media platform where users can upload original content in the form of short videos has become an important part of many consumers’ lives, and can now be used as an important tool for your business.

TikTok Shop or commerce was first launched into Indonesia in 2021 and was released to US consumers in September 2022. TikTok Shop is an e-commerce marketplace that allows sellers to advertise, promote, and sell their product all in one place. It allows sellers to capitalize on trends by reaching their audience in the place where they turn to for entertainment. 

And TikTok Shop is one trend that’s not too late to join. 

According to a marketing study completed by TikTok:

• A whopping 62% of weekly TikTok users have engaged in e-commerce on the platform.
• 1 in 4 TikTok users are interested in buying from TikTok LIVE because they are able to see the product, rather than just seeing an image.
• 1.5 times more TikTok Shop users are more likely to purchase an item they discovered on the app versus users shopping on another app.

Are you interested in opening a new business on TikTok Shop, or tap into the potential of the app for your existing business? Here are the answers to some commonly asked questions that can help you elevate your business strategy and grow your e-commerce revenue with TikTok Shop.

What is TikTok Shop?

TikTok Shop, whose motto is to “Create joy and sell more,” is an e-commerce feature that is integrated directly into the platform.

The feature allows TikTok users to shop while watching content from their favorite creators and businesses. Products used in these videos are sold in the individual seller or business’ page, making it an effective way to reach your audience.

What is the best way to sell on TikTok Shop?

There are many ways to use TikTok Shop. It is not one-size-fits all, and sellers must consider their audience and their preferences on how they want to be engaged with and how they want to make purchases.

There are four ways to use TikTok Shop to create a TikTok e-commerce strategy to sell your product:

• Live shopping: this feature allows users to purchase an item while watching a TikTok LIVE. Content creators can highlight attributes of products and directly market to an audience.
• Stoppable videos: TikTok users can browse products featured in content posted to their account. The product is linked in the video so consumers can have immediate access to all products highlighted in a video.
• Product showcase: this is a tab on a business’ or content creators page that acts as an online storefront. Sellers can list all their available products here.
• Shop tab: this feature allows TikTok users to browse all products being sold across the app. This is perhaps the closest to a traditional online store front.

These features let TikTok users shop in-app and provides a way for individual sellers or businesses to promote their products.

TikTok Shop allows sellers to dropship, which is a popular option for sellers looking to maximize profits. This moves help reduces potential warehouse and storage costs by shipping items directly from the producer to the consumer.

Image sources: TikTok Shop Academy

What are TikTok Shop fees?

It is free to set up a TikTok Shop. However, there are commissions and fees that sellers need to be aware of. Fees vary by country, as well, so sellers need to be aware of their country or region’s individual fee structure. The below examples are the latest data from TikTok Shop Academy, Philippines. 

Three are three different types of fees:

• Commission: this is the percentage amount TikTok Shop charges to a seller for each product sold. The rate varies based on the type of product sold (i.e.: electronics will have a different commission rate than beauty products). They typically range from 2% to 5.2% in the Philippines. 
• Affiliate: An affiliate fee is paid to a content creator who successfully promoted a seller’s product. The affiliate fee rate is negotiated and agreed upon by both the seller and promoter.
• Transaction: This is a flat service fee charged to the seller for each item sold. This fee is currently 2.24% (VAT included) in the Philippines.

It is important to note that TikTok fees were recently increased in many countries.

What are ways to use ads on TikTok Shop?

In addition to content marketing, TikTok Shop owners can promote their offerings via ads or campaigns. 

• TikTok offers sellers the opportunity to join larger promotional events organized by TikTok Shop that assists sellers with promoting their product by boosting store traffic, thereby helping them to increase sales and reach more consumers.
• Sellers are able to offer discounts in the form of a percentage or dollar amount off of the original price.
• TikTok Shop allows sellers to offer free shipping to their customers.
• TikTok Shop offers a variety of incentives to businesses to keep them selling on the app. For example, in the US, TikTok Shop waives any shipping fees for buyers on all orders above $5 for first time customers. The app also announced a program called the £1Million Club, an incentive plan that will help sellers in the UK reach one million in sales.

How can I use both Shopify and TikTok Shop?

Both TikTok and Shopify are e-commerce platforms where businesses or individual sellers can sell directly to consumers. While it is not available in every country quite yet, Shopify sellers can use TikTok for Business to promote their products with ads on TikTok. The app also provides tools for measuring conversion rates and the success of the ads and the broader marketing campaign.In 

TikTok for Business also allows Shopify business owners to sync their product listing to TikTok, thereby reaching a broader audience. 

Image source: Tech In Asia

What’s Next for TikTok Shop?

TikTok Shop has its sights set on Southeast Asia, which is home to 265 million TikTok users. Tech in Asia reports that TikTok Shop is quickly working to increase its presence—to much success. TikTok Shop is now the second largest e-commerce platform (behind Shopee) in Southeast Asia, according to Momentum Works, with Vietnam and Thailand showing the fastest growth. 

This growth is likely to be helped by the merger between TikTok Shop and Tokopedia in the latest of 2023. According to Reuters, TikTok acquired about 75% of Tokopedia—the largest e-commerce platform in Indonesia—a move that allowed them to enter into a market in which they were banned. 

Indonesia is also the testing ground for TikTok’s newest initiative that aims to turn likes into in-person visits—and perhaps an initial foray into the food and beverage sales industry, according to Tech in Asia. This feature, called “Local Services,” modeled after services that have successfully been integrated in the Chinese app called Douyin. It initially allows users to discover new experiences nearby and purchase dining vouchers, food delivery, attraction tickets, and hotel bookings.