In the rapidly evolving world of e-commerce, TikTok has emerged as a significant player with its TikTok Shop platform. With millions of users worldwide, TikTok isn’t just a social media platform; it’s rapidly becoming a go-to ecommerce platform. As sellers explore this new avenue to reach potential customers, understanding the cost structure becomes paramount. This article delves into the intricacies of selling on TikTok Shop, breaking down the various fees involved and offering insights into how they compare with other marketplaces.
How Much Does it Cost to Sell Products on TikTok?
TikTok Shop charges a commission of 5% on all products sold. For new sellers who upload a product within 60 days of account activation, there’s a promotional reduced commission of 1.8% for the initial 90 days.
Types of TikTok Shop Fees
Fortunately, TikTok Shop fees are relatively straight forward when compared to other marketplaces. TikTok Shop charges the selling commission as set out above. However, there are no ongoing account fees or listing fees as you may expect to see on other marketplaces. This makes pricing your products for TikTok Shop comparatively straight forward. Should you choose to make use of Tiktok’s fulfillment service, Fulfilled by TikTok (FBT), then there are various additional fees that you may incur.
Fulfillment fees
If you choose to use FBT for fulfillment, the total fee (exclusive of VAT) per item starts from £3.20 for items up to 1kg. There are additional fees for higher weighted packages, varying depending upon the specific package weight.
Warehousing
In order to use Tiktok’s fulfillment services, you will also need to store your inventory in TikTok’s warehousing facilities. If your stock turnover remains under 30 days, you won’t incur warehousing charges. However, if stock remains in the warehouse for over 30 days, fees apply. Warehousing is charged per cubic metre at a rate of 36p per day excluding VAT. If you have partial cubic metres of storage in use, FBT will charge in increments of 0.001 cubic metre.
Packaging
There are various different packaging costs that FBT will charge when packaging your products. Pre-packaging (e.g. wrapping the product in bubble wrap) is charged at a rate of 50p per item, although this is reduced to 34p if you provide the packaging material to FBT. There are then further packaging fees in respect of the outer packaging. A 50cm x 50cm x 40cm box is charged at a rate of £2.81 per box.
Other fulfillment related services
In the future, TikTok plans to introduce additional fulfillment services, which may come with added costs. These potential services include product labeling with SKU labels and the insertion of leaflets into shipments.
Factors Influencing TikTok Shop Fees
In the initial 60 day period after registration, there is the opportunity to influence fees by ensuring the initial product registration in done in a timely manner to take advantage of the initial discount period. Beyond that, the main factor that will influence TikTok Shop fees is whether or not Fulfillment by TikTok is used. Another factor that will influence fees is whether or not there are affiliates to be paid in respect of your TikTok Shop sales. Affiliates are able to deduct their fees directly from your TikTok Shop payouts. Being aware of these factors can help sellers strategise and potentially reduce costs.
Tips to Reduce TikTok Shop Fees
Once you are selling on TikTok Shop, you will receive settlement reports which you can download from the TikTok platform. Settlement reports provide a breakdown of the each payout, the sales that have been included within it and also the various fees that have been deduced by TikTok. Analysing this report help you to understand the fees that you are being charged and provide you with the opportunity to review them and ensure that they are correct and in line with TikTok Shop’s published pricing.
Comparing TikTok Shop Fees to Other Marketplaces
TikTok Shop fees are currently comparatively lower when compared to other marketplaces like Amazon. However, it is important to be aware that per TikTok Shop terms and conditions, they are only required to give 15 days notice to amend their commission fees. It is possible that as TikTok Shop becomes a more established marketplace, these fees may increase.
Conclusion
Navigating the e-commerce landscape requires a keen understanding of cost structures, and TikTok Shop presents an opportunity to take advantage of a lower fee structure compared to other marketplaces. While its commission rates and fulfillment services offer competitive pricing, it’s essential for sellers to stay informed and proactive. By regularly reviewing settlement reports and keeping an eye on potential changes in the platform’s fee structure, sellers can ensure they’re maximising their profits and making the most of this burgeoning e-commerce platform. As with any marketplace, due diligence and continuous learning are the keys to success. If you’re seeking expert guidance on e-commerce accounting, our team of chartered accountants specialises in this domain.
Don’t navigate the complexities of e-commerce accounting alone. Reach out to us today for expert assistance in accurately accounting for your TikTok Shop revenue and fees. Call on 01942 725419.