TikTok Shop is an integrated in-app shopping experience on the popular short-form video app TikTok
(TikTok Newsroom). It allows creators and merchants to create product listings that users can browse and purchase directly within the TikTok app without leaving the platform. TikTok Shop was first piloted in select markets in 2020 and was rolled out more widely in 2021.
The purpose of TikTok Shop is to create a seamless, entertaining shopping experience that connects TikTok’s community with brands and products relevant to their interests. As a social commerce platform, it aims to leverage the app’s viral videos, influencer marketing, and engaged user base to drive product discovery and sales. The target audience for TikTok Shop is the app’s existing user base, which skews young, ranging from Gen Z to young Millennials.
How TikTok Shop Works
TikTok Shop allows users to easily purchase products featured in videos on the platform without leaving the app. When a creator or seller showcases an item in a video, a shopping bag icon appears on the bottom left corner. Tapping on this icon brings up a purchase page with product details, pricing, color and size options if applicable.
To buy an item, users simply add it to their cart and checkout. TikTok Shop supports payment methods such as credit cards, Apple Pay, and PayPal. After completing the purchase, buyers can track the delivery status of their orders directly within TikTok.
Once an order is placed, the seller processes and ships the items to the buyer. Delivery time depends on the seller’s processing and fulfillment speed. Some sellers offer same-day shipping, while others may take a few days to process orders. TikTok Shop provides estimated shipping times and tracking information so buyers can see when to expect their packages.
Overall, the shopping experience aims to be seamless and intuitive. By allowing purchases directly within the app, TikTok Shop makes it easy for users to shop the products shown in videos from their favorite creators.
Product Categories
TikTok Shop offers a wide variety of product categories that sellers can list their items under. Some of the main categories available include fashion, beauty, electronics, home goods, toys, sports equipment, and food and beverage items. Within each broader category, there are more specific subcategories that further define the product type.
For fashion, subcategories consist of clothing, shoes, accessories, bags, jewelry, and more. Beauty encompasses skincare, makeup, haircare, fragrances, and tools. Under electronics, sellers can choose from options like smartphones, tablets, headphones, speakers, and smart home devices. The food and beverage category contains grocery items, snacks, fresh produce, alcoholic beverages, and restaurant delivery.
By selecting the most accurate product categories and subcategories, sellers help ensure their items appear in relevant searches and recommendations to potential buyers. TikTok’s recommendation algorithm relies heavily on these categorical metadata tags to connect users with products they may want to purchase.
Seller Requirements
To become a seller on TikTok Shop, merchants must meet certain requirements. According to the TikTok Shop Seller Center, sellers must have a business license and be an authorized dealer for the products they wish to sell.
Sellers must also meet the following requirements:
- Be at least 18 years old
- Provide valid government ID
- Provide business registration documents
- Provide a digital copy of their business license
- Have an existing online presence and social media following
To apply, prospective sellers can visit the TikTok Shop registration page and provide the required business details and documentation. TikTok will review applications and approve sellers who meet the requirements. Once approved, sellers can set up their TikTok Shop profiles and begin listing products.
According to the TikTok Shop Seller Center, the application review process may take a few business days.
Buyer Benefits
TikTok Shop offers several key benefits for buyers, focused on convenience, deals, and influencer recommendations.
One of the main advantages is convenience. As described on the TikTok Shop website, the platform allows for a “frictionless shopping experience” by enabling users to easily purchase products directly within the TikTok app https://shop.tiktok.com/business/us. This creates a seamless path from discovering a product in a TikTok video to checking out and buying it.
Buyers can also take advantage of special deals and promotions only available through TikTok Shop. Sellers and influencers may offer discounts or bundle pricing to incentivize purchases within the app. According to one analysis, this access to exclusive deals is a major buyer benefit https://www.marketingdonut.co.uk/blog/23/08/benefits-of-tiktok-shop-for-ecommerce-businesses.
Additionally, recommendations from popular TikTok creators can influence buying decisions and inspire purchases. Seeing products used or endorsed by influencers they follow can give buyers confidence in purchasing.
Seller Benefits
One of the biggest benefits for sellers on TikTok Shop is access to a wider audience. With over 1 billion monthly active users, TikTok provides sellers an opportunity to showcase products to a massive pool of potential new customers (Source). TikTok’s algorithm is designed to quickly determine user interests and preferences, allowing products to be targeted to highly relevant users.
TikTok Shop also makes it easy for sellers to collaborate with influencers and content creators. Influencer marketing partnerships allow brands to leverage influencers’ existing audiences and trust. Sellers can work with creators to authentically showcase and endorse products in a creative, engaging format tailored to the TikTok audience. Overall, the massive reach and influencer partnerships available on TikTok Shop give sellers access to new demographics and powerful marketing opportunities.
Advertising
TikTok provides advertising options to promote products and stores in the TikTok Shop. One key advertising format is TikTok Shopping Ads, which are short video ads that showcase products that viewers can tap on to be directed to the retailer’s online store to complete the purchase [1].
Influencers also play a major role in advertising products on TikTok Shop. Many top creators work with brands to promote and recommend products through sponsored content. This content often contains links or visual cues guiding viewers to purchase featured products directly through TikTok Shop [1].
Commissions and Fees
TikTok earns money from TikTok Shop by charging sellers commissions and fees on each sale. According to TikTok’s updated seller guidelines, the commission fee will typically range from 5-6% (Source). This is an increase from the previous 2% commission plus $0.30 per order that TikTok had been charging.
The exact commission rate depends on the product category. For example, fashion and accessories carry a 2.5-3.6% commission rate while consumer electronics are charged at 5-6% (Source). TikTok has said this commission fee will be the only fee they charge sellers, with no additional transaction or other fees (Source).
By charging sellers a percentage commission on sales, TikTok is able to earn revenue from transactions made through TikTok Shop. The commissions provide an ongoing income stream as the platform grows.
Geographic Availability
TikTok Shop is currently only available in certain countries and regions. As of September 2022, TikTok Shop is available in the following locations:
United States
United Kingdom
Southeast Asia, including Indonesia, Thailand, Malaysia, Vietnam, and the Philippines.
Additional countries in Europe, including France, Italy, Spain, and Germany, are expected to gain access to TikTok Shop in 2022.
TikTok plans to eventually expand TikTok Shop globally. However, the company is taking a staged approach to rolling it out across different regions.
The Future of TikTok Shop
TikTok Shop has huge potential for growth in the future. According to one source, a significant 68% of TikTok’s core demographic are predicted to purchase directly on TikTok Shop, creating a promising new avenue for brands to reach younger generations (Why Brands Should Be on TikTok Shop: A Growth Strategy …). As TikTok continues expanding into new markets, the number of TikTok Shop users is likely to grow exponentially.
TikTok is also expected to roll out new shoppable ad formats and features to streamline the buying experience in the future. This could include shoppable livestreams, improved product catalogs, and tools for sellers to better manage inventory and fulfillment (The rise of TikTok Shop: A game-changer for ecommerce). With TikTok’s massive user base and influence, especially among younger consumers, TikTok Shop has the potential to reshape ecommerce and become a major retail channel.
