What is TikTok Shop

Everyone knows TikTok as an entertainment platform. That very much still stands but what many people are not aware of is that TikTok has become a prime destination to discover and buy new products. Say hello to TikTok Shop.

Over 55 billion video views of the hashtag #TikTokMadeMeBuyIt is testament to the influence TikTok has over consumer behaviour.

Historically all of that attention has gravitated towards Amazon, retail websites and bricks and mortar stores.  Unsurprisingly, TikTok wanted to stop the leakage. Hence the arrival of TikTok Shop.

TikTok Shop is additional functionality within the TikTok app which allows brands to run a store, market products through affiliates, live streams, advertising and content and for consumers to purchase items without leaving the app.

In this guide I’ll take you through all of the core information you need to know about how to sell on TikTok Shop. I’ve linked to a bunch of resources from the rest of the FordeBaker team, TikTok’s guides and other useful products and services so that you have the very best support at your fingertips.

  1. What Do Brands Need to Know About TikTok Shop? 

Simply put, products sell on TikTok Shop.  Everyone is right to be cautious about social commerce. Social Media’s recent history is littered with big promises and less than stellar performance but TikTok is different.  

The overwhelming evidence is that TikTok has found the right blend of authenticity, product promotion and convenience.  The fact that this one product alone has sold 1.2 million units tells you all you need to know.

Putting the Shop functionality to one side for a second, there’s an argument that brands should be present on TikTok purely for the awareness and audience engagement. When you couple that with a seamless purchase experience and consumers that have bought into the idea of completing transactions directly within the app you can see why TikTok Shop is fast becoming a potent force in ecommerce. 

If you need to make a business case for launching onto TikTok Shop then think of it in these terms

  1. There’s a large audience spending a huge amount of time consuming content on TikTok. That’s an opportunity to build the brand
  2. It’s a great way to introduce your brand and products to younger audiences
  3. It will create a halo effect of increased sales on your other channels

Put another way, if you’re looking to increase customer acquisition volumes then TikTok Shop has to be a priority.  

  1. How Do Consumers Find and Buy Products?

Products are most commonly discovered through awareness created by influencers.  We’ll call influencers creators or affiliates depending on the context but they mean the same thing.

From the biggest global celebrities all the way through to micro influencers everyone is promoting products.

And really importantly, there is no shame in it. People expect and WANT the people they follow to curate products. It’s not just about the desire to find products but it’s also about the tribal aspect of finding and fitting in with others.

The creator space will always be a prominent aspect of product discovery but increasingly we’re seeing consumers use the ‘Shop’ tab and the search functionality to find products.  Here the behaviour’s slightly different. Consumers tend to be further down the purchase funnel. They may have seen something in a video but not clicked the referral link.  

They may also be repeat-purchasing. That may come as a surprise to you but according to the survey below repeat purchasing and the associated product loyalty isn’t far off Amazon and that’s without any subscription features akin to Amazon’s Subscribe & Save program.

The third way that consumers find and buy products is through advertising on the platform.  TikTok offers a rich audience dataset and seamless advertising formats to allow brands to create instantaneous reach.

Advertising is a volume game. It’s driving very healthy Return on Ad Spend (ROAS) but also creating a halo effect through to the Shop tab.  Expect to see that affect crossing-over to Amazon and your own website too.

  1. What are the Benefits for Consumers?

Consumers love shopping on TikTok Shop for many reasons but I’d argue these are the three main reasons:

Discovery: It is the ‘go to’ place for people to find new brands and products. Novelty is inherent to the platform. That crosses over superbly for product awareness. 

Curation: The internet creates unlimited choice but too much choice is overwhelming. Being guided and educated by people that you can associate with cuts out the stress of making decisions.

Convenience: What makes Amazon an ecommerce powerhouse?  The ease of purchasing.  TikTok has replicated this model and it’s very effective. Nothing motivates a consumer like convenience. 

  1. Why Launch on TikTok Shop?

Fundamentally the goal is to acquire new customers and sell more products.  That might sound too blunt when talking about TikTok but remember there are two layers to TikTok; it’s a branding exercise and with the introduction of Shop it evolves into a social commerce platform.  It can still be a standalone branding exercise but if you’re adding Shop features then your objectives evolve too.

Pretty much every business is on the treadmill of acquiring new customers. TikTok Shop provides a way to engage with audiences that might otherwise never engage with your brand.  The old adage of ‘fish where the fishes swim’ has never been more relevant.

Being active where your customers hangout isn’t necessarily unique to TikTok.  What makes TikTok Shop unique is the ability to rapidly create product awareness. Where other marketplaces are search based; you optimise to appear in search results and wait for people to search. 

TikTok allows you to push your product in front of millions of people whether that’s by leveraging creators, riding the wave of trends or the brute force of advertising. The unprecedented speed and scale of product discovery is TikTok Shop’s unique selling point.

  1. How does TikTok Shop Influence Sales on Other Marketplaces and Brand Websites?

Adding another sales channel often comes with a health warning about cannibalisation.  Why add complexity if the new channel is just going to take sales from somewhere else?

That caution is understandable but in the case of TikTok Shop it is unwarranted. 

Why?  

Simply because TikTok Shop is inherently brilliant at creating product discovery. That means reaching new audiences and therefore very little risk of cannibalising existing sales.

Because TikTok is a great platform for creating brand awareness you should expect to see the opposite of cannibalisation.  TikTok should have a net positive effect on sales on your website, Amazon and other points of sale.

The relationship with Amazon is particularly interesting. Shop has been created largely to close the loop on consumers finding product on TikTok and going off to Amazon to purchase. But, as we all know, Amazon is habitual and people will still flock to it because of the convenience.  

Amazon sales should improve as a result AND with a lower overall cost per sale.  The second order effect of driving traffic from outside of Amazon is that the algorithm loves it!  Don’t be surprised if your products suddenly have far more organic visibility on Amazon and in turn an even bigger uplift in sales. 

  1. Which Countries is TikTok Shop available in?

TikTok Shop is available in the following countries

  • US
  • UK
  • Indonesia
  • Malaysia
  • the Philippines
  • Singapore
  • Thailand
  • Vietnam

We expect TikTok Shop to launch into other European countries later in 2024 and beyond.

  1. What Fees does TikTok Shop Charge?

TikTok aren’t messing about. They know that they need to bring as many brands as possible into the platform. As a result, their commission structure is very favourable to brands. This of course will change over time which makes it all the more important to make hay while the sun shines.

TikTok charges 5% commission on all sales. Here’s the formula

Commission = (Customer payment + Platform discount – Customer refund) * 5%

Platform discount is usually a discount or price reduction that the seller or possibly TikTok themselves have funded.

If you’re using Fulfiled by TikTok (more on this later) then you’ll pay a mixture of receiving, storage, pick and pack and delivery fees. Fees are comparable to Amazon or a 3PL.

The best way to familiarise yourself with the fees is to test it out. Play around with this calculator and you’ll soon get the hang of it.

We’ll touch on this later, but any affiliate commission owed to creator’s will also be deducted by TikTok.

  1. How to Create a TikTok Shop account

The creation of the Shop account is done at the country level. So if you’re looking to sell on TikTok in the US and UK then you’ll follow slightly different processes.  We’ve explained both processes in full detail in these two articles.

Read through the instructions carefully as TikTok has set out very specific eligibility criteria. Whilst this might be annoying, it is a one-off job and has been created to try to protect the marketplace from bad actors.  This is to your advantage!

  1. How to Set Up TikTok Shop

Those of you who manage Amazon accounts will no doubt have many a battle scar from trying to wrangle their systems to do what you want.

Luckily, TikTok Shop has none of those complications. Building out your brand shop is relatively easy.  

At it’s foundation you’ll need to complete these tasks

  • Product Pages
  • Product metadata
  • Pricing
  • Fulfilment and inventory integrations
  • Shipping (if using Fulfilled by TikTok)

The product content you host on your website and/or Amazon will be effective on TikTok Shop. We always recommend trying to customise tone, presentation and keywords to the platform but there’s no harm in pulling through your existing content at the start.

  1. How to Fulfil TikTok Shop Orders 

Much like Amazon, TikTok allows brands to either use their own fulfilment operations or send products into TikTok fulfilment centres.

To begin with, many businesses plug TikTok Shop into their website CMS.  It’s a great way to set up with the minimum of fuss and move onto the more important task of selling products.

Businesses that use Shopify can integrate seamlessly into TikTok by following these instructions.  In this scenario TikTok is treated as a ‘sales channel’ with order information passing through from TikTok into Shopify and onto your regular order and fulfilment systems.  It’s genuinely a piece of cake to get started!

If businesses don’t want to or can’t fulfil orders themselves or have a 3rd party to do it then they can use TikTok’s fulfilment services. This is known as Fulfillment by TikTok or FBT (anyone familiar with Amazon will recognise where this has come from).

A third option is to buy shipping labels from your TikTok Shop account but continue to use your own fulfilment operations.

As with account creation, fulfilment options are country-specific. Be sure to read our TikTok Shop UK fulfilment guide to find out the most suitable set up for your brand.

  1. How Do Brands Receive Their Revenue and How are Influencers Paid?

Brands will receive their revenue in the same way they do with other marketplaces. TikTok will disburse revenue minus their selling fees, advertising and any fulfilment costs.  You’ll be asked to set up your bank details during the onboarding process.

If you have set up your creator affiliate campaigns through the Creator Marketplace then all units sold, revenue and associated commission calculations will be displayed in your account. 

The commission owed to creators will be deducted from your revenue and paid to the creator by TikTok. You will not need to make any payments outside of this process unless you’ve specifically agreed to any additional fixed fee payments.

  1. What Makes Brands Effective on TikTok Shop?

There’s no one single recipe for success on TikTok Shop but there absolutely are some fundamentals that every brand should be applying.

  • Go Native – inevitably some work that you do on other platforms will cross-over to TikTok Shop but a complete copy/paste job will fail. Take the time to understand the nuances of the platform and what makes it unique. Spend time understanding how content gets shared and what ingredients create reach and engagement 
  • Quick to React – unlike platforms such as Amazon, brands have to be very actively engaged with TikTok. Monitoring and reacting to latest trends is a great way to show consumers that you understand the medium. For the brand it can mean unrivalled bursts of attention 
  • Authentic Voice – don’t bother trying to sell on TikTok Shop if you haven’t spent the time understanding how to communicate on the platform.  Fundamental to your communication must be a strong sense of openness, credibility and authenticity. Be real. Don’t be scared to be human
  • Live Streaming – some have tried, all have failed. TikTok is the exception. Live shopping is very successful particularly during big sales events. Learn how the best do it, consider your trading strategy and the best way to present to keep shoppers engaged
  • Media Budget – TikTok Shop ads drive conversions at a very effective ROAS. The audience is large and keen to buy new products. With that mix it’s important to invest into advertising. Not just the amount you spend but also the quality of the creative
  1. How to Make Effective Use of TikTok Shop Marketing Channels

Creators should be your ‘go-to’ channel, particularly at launch. The reason being is that they have ready-made audiences and ultimately that is the most common way that consumers find out and get excited about new products on TikTok. 

Play to the strengths of the platform.

TikTok has built an incredibly useful creator marketplace which matches brands with creators. Brands can filter creators by a range of behavioural characteristics to find the perfect partners.  

You’ll need a sampling budget and to negotiate affiliate commissions with each creator. Commissions range from 5%-15% but you may want to get more creative with the commission structure for your best performing creators. We’ve found that being upfront about the potential to earn even more money is a great way to onboard and incentivise creators to work hard for you.

Brands assume that they need to have a fully-fledged branded content strategy from day one. That’s true if your goal is audience engagement and brand awareness but purely within the prism of selling products; it is not necessary.

Affiliates and advertising will create all of the reach you need to sell products.  A brand channel should become a focus over time but it requires a lot of time, creativity and cost to get it right.

Advertising is highly effective. The combination of great media placements, robust audience data and the added convenience of purchasing all within the app means that brands can achieve very healthy Return on Ad Spend (ROAS).

The most successful TikTok Shop marketing strategies are combining affiliate marketing with advertising.  Both create tremendous reach but offer different qualities that complement each other.

Creators give you authenticity, credibility and direct engagement with the target audience and a smart advertising strategy will broaden the reach whilst also  guiding people through the purchase funnel.

  1. Which TikTok Shop KPIs to Focus on

Before we get into it we should highlight the distinction between your Shop and non-Shop objectives and measurement.

In pre-Shop times TikTok performance solely concentrated on audience growth and engagement and ROAS linked to advertising that was driving traffic towards a brand’s website. 

Both of those areas are still important and should not be forgotten. But purely in relation to TikTok Shop KPIs, here’s what to focus on

Account & Advertising Level

  • Revenue
  • Units Sold
  • Advertising Sales
  • Return on Ad Spend
  • Sales by channel – advertising, search etc.

Shop Conversion Funnel

  • Product Page Views
  • Checkouts Initiated 
  • Adds to Cart
  • Purchases 
  • Average Order Value
  • Units per Transaction

When measuring the effectiveness of creators focus on

  • GMV per 1000 views
  • Revenue
  • Units Sold

Note: GMV means Gross Merchandise Value which is defined as units sold X sales price.

  1. TikTok Shop Advertising Objectives and Options

Within the context of TikTok Shop, advertising has to focus on its ability to drive purchase.  It may seem a stretch for ads to achieve this on an entertainment platform but remember that brands have had the capability to run ads on TikTok for many years. Just that the traffic had to be pointed to an external destination. 

We know ads are effective and even more so now that the consumers can enjoy the ultra-convenience of completing the shopping experience within the app.

As an advertiser your objective then is two-fold.  Increase the Return on Ad Spend in balance with the prime aim of increasing revenue from advertising.

TikTok offers an array of ad formats and placements. With the advent of TikTok Shop has come more traditional search based advertising alongside the longstanding ‘paid social’ ads that use audience demographics and app usage behaviour as the basis for how they’re targeted.

What you’ll see is a perfect blend of ‘mid-funnel’ awareness and consideration options to complement ‘bottom of the funnel’ search ads. 

The ability to promote your brand and product on one platform to millions of people with  full funnel opportunities is what makes advertising on TikTok so effective.

  1. TikTok Shop Product Promotion

We’ve established that TikTok is great for brand and product awareness and there are excellent opportunities through paid and organic channels to increase visibility throughout the purchase funnel.

Digital marketers will be familiar with this scenario.  What makes a marketplace strategy truly effective is to build on these ideas of traffic and conversion by introducing a trading mindset.  A trading strategy starts to ask questions such as 

  • What’s going to make your offering standout from the competition? 
  • How do you maximise visibility for new products?  
  • How do you maximise sell through during peak periods?  
  • How do you increase average order value?

Integral to this approach is smart use of the promotional mechanisms that TikTok Shop offers.  Think about the unique aspects of each one and how they might align with business and product objectives.

Product Discount – the original price is struck-through and the promotional price is presented side-by-side on the product page for up to 30 days.

Flash Deal limited-time promotions are perfect for playing into the impulsive shopping tendencies we see from customers on TikTok Shop. The Flash Deal sign stands out on search results and has its own promotional area on the TikTok Shop Tab’s home screen. 

Buy More Save More – discounts such as ‘buy 2 save 5%, buy 3 save 10%’. This is an effective form of promotion for brands that want to improve AOV and basket size.

Gift with Purchasethe feeling of receiving additional value for free will build loyalty to the brand, not to mention giving the customers the chance to try something else from the brand’s portfolio. This provides the opportunity for repeat custom across two products instead of one. 

Shipping Fee Discount Abandoned baskets at the checkout page on TikTok Shop are likely to be caused by shipping fees putting customers off finalising their transaction, offering a discount/free shipping can be the best way to see convert the undecided.

Bundle Promotion Similar to Buy More Save More promotions, bundle promotions allow the brand to guide the customer to buy more than one product together in a bundle for a reduced price. 

  1. Best TikTok Tools

The first thing to say is that you don’t need a vast array of tech to successfully scale on TikTok Shop.

If you’re not using Fulfilled by TikTok then at a minimum you will require software to handle order processing and fulfilment. No matter which fulfilment option you choose then you’ll also want to see if your inventory management software integrates with TikTok so you don’t lose track of your stock position.

Everything else can be done manually or doesn’t require any intervention. TikTok also offers a great suite of marketing tools from within your Shop account.  The ads console and Creator Marketplace will soon become your best friends!

Of course, as you start to scale up and your marketing strategy becomes more sophisticated the case for introducing tech becomes ever more justifiable. 

Here are some of our favourites. 

Conclusion

In summary, TikTok Shop represents a tremendous opportunity for brands to reach new audiences and scale rapidly. 

The set up is quick and easy allowing businesses to focus on what matters; creativity, audience engagement and promoting their products.

TikTok Shop has only just got started but it is set to become the number one rival to Amazon.

Early adopters have the freedom to fail and fail cheaply. Why not start now and get ahead of the competition?

We’ve recently launched a TikTok Shop workshop designed to unravel the complexity of TikTok Shop providing invaluable insights, practical tips, and actionable strategies to elevate your TikTok Shop experience. More details here.

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