Are you still wondering how TikTok Shop can impact your online sales strategy? Positioned at the center of Discovery Commerce, TikTok Shop offers brands unprecedented access to millions of engaged users.
According to GoDataFeed, 58% of TikTok users seamlessly transition from content discovery to purchase. This tremendous potential for brand amplification is fueled by TikTok's vibrant user base and ever-evolving consumer trends.
Understanding TikTok Shop’s marketplace model
TikTok Shop operates a marketplace business model, different from platforms like Amazon. Unlike Amazon, TikTok does not directly purchase products from brands for resale. This model can present challenges for B2B sellers accustomed to inter-business transactions rather than Direct-to-Consumer models. Sellers directly manage storage, fulfillment, andbilling activities.
Addressing B2B challenges with Merchants of Record
B2B sellers lacking Direct-to-Consumer logistics or retailbilling systems can consider partnering with a Merchant of Record. Thislegal entity acts as a reseller on behalf of the brand, managing e-commerce administrative burdens. Although the TikTok Shop account belongs to the Merchant of Record, brand consistency is maintained by displaying the brand name.
Optimizing with logistics by TikTok
Similar to Amazon's offerings, TikTok Shop is progressively implementing the “Fulfilled by TikTok” (FBT) service. For a fee, FBT manages the order shipping process for sellers, including storage, preparation,and dispatch, excluding billing. FBT is currently active in Germany, Spain, and the UK, simplifying operations for sellers in these regions.
Cost structure and country-specific commissions
Opening a TikTok Shop does not involve monthly subscriptionfees. Instead, TikTok retains a percentage commission based on transaction value, inclusive of VAT and shipping costs, varying by country and category. In newly launched regions such as Italy, France, Germany, Spain, and Ireland, the commission is 5%, while in the UK—with a longer operational history—it reaches 9%. Notably, TikTok Shop’s fee is currently more competitive than other active marketplaces—an advantageous opportunity to seize, though it is uncertain how long it will remain as such.
Strategic product selection for financial sustainability
Product selection is critical not only for aligning with channel trends but also for ensuring financial sustainability within the marketplace. It is essential to understand the various cost factors, especially for sellers lacking Direct-to-Consumer logistics. Assets like bundled complementary products, particularly for mass consumer goods, can elevate transaction value and offset marketplace investments.
Driving sales through engaging content
The essence of the TikTok platform lies in content creation and consumption, crucial for brand discovery and conversion. Over two-thirds of sales on TikTok Shop are generated by shoppable videos, live shopping, and affiliate marketing activities. These methods harness TikTok's content-driven nature, offering genuine and engaging content increases conversion opportunities, exemplifying the concept of Discovery Commerce.
Are you ready to leverage TikTok Shop’s vast potential for your brand? Contact us now to discover how your brand can optimally harness Discovery Commerce. We offer personalized strategies and expert support to turn insights into effective actions, maximizing your brand’s reach.
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