Not inferior to e-commerce platforms such as Shopee, Lazada, … Tiktok Shop stands out as an ideal sales channel for all businesses. For those who intend to do business online on this platform, it is necessary to clearly understand the types of selling costs on the Tiktok Shop platform. In today’s article, Optimal Agency will help you answer questions about the latest types of sales costs on Tiktok Shop. Follow now!
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Why should you sell on Tiktok Shop?
Tiktok Shop is an e-commerce platform integrated directly into the Tiktok application, providing space for businesses to introduce, promote products, and sell. Although it has not appeared for long, this platform has attracted the attention of many sellers and businesses. Tiktok Shop has become the most popular sales channel because of the large number of users, mainly young people with a high demand for online shopping.
When implementing sales activities and opening online stores on Tiktok Shop, sellers and businesses can reach young customers with a passion for regular online shopping. Businesses will expand their business activities and achieve high sales in a short time.
Advertising content and product introductions are presented in the form of realistic, vivid videos, completely different from other e-commerce platforms. Therefore, attracting customers becomes simpler and more effective, contributing to maximizing conversion rates.
Unlike other sales platforms, the integration of shopping and entertainment on Tiktok Shop will bring a great experience to customers. Because they can enjoy great videos and make purchases easily and conveniently. Buy immediately while watching review videos without having to redirect to another page. This also contributes to shortening the purchasing process, promoting conversion increasing sales, and maximizing profits.
Types of selling costs on the Tiktok Shop platform you should know
Similar to other platforms such as Shopee, Lazada, Tiki, …, Tiktok Shop also charges a fee as a % of the total order value. Sellers on Tiktok Shop need to pay a fee when they register to sell any product and have a successful order on the platform. This fee is used to support Tiktok’s operations such as payment processing, shipping, customer support, communications, …
How are selling fees on the TikTok Shop platform calculated?
At the time of its inception, the selling fee on the Tiktok Shop platform was 1% of the total order value. For sellers and businesses, this is an attractive fee compared to other e-commerce products with quite high fees of about 8 – 14%.
Currently, Tiktok Shop has adjusted the sales fee to be 4% of the total order value including the shipping fee as updated on March 26, 2024. This fee applies to all sellers, regardless of whether they are individuals or businesses.
For sellers who are businesses with a registered tax code and verified by TikTok Shop, the service fee will not include tax. In the future, this fee may be adjusted over time and will be applied to all product lines and orders.
The formula for calculating sales costs on TikTok Shop: Sales fee = 4% x (Amount paid by buyer – Refund of buyer’s order).
In addition to the floor fee of 4%, you need to pay attention to 2 other fixed fees: Shipping Fee Program (4.5%) and Tax (1.5%) for a total of 10%. Regarding the 1.5% tax, including 1% value-added tax and 0.5% personal income tax. The Shipping Fee Program is a program that helps customers get more Shipping Vouchers with better shipping discounts for products in the seller’s store. This type of fee helps sellers improve visibility and increase product conversion rates effectively.
Other types of sales costs on the Tiktok Shop platform to pay attention to
Shipping fee
With all forms of online sales on all platforms including Tiktok Shop, sellers need to pay shipping costs. This is the fee that sellers must pay to shipping units to bring products from the store to customers. At present, Tiktok has launched a preferential shipping policy for buyers with free shipping vouchers 3 times per week and up to 6 times/month. In addition, the platform also offers many special shipping service packages for users to have the opportunity to receive more Freeship codes.
Advertising costs
For your products and brands to reach more potential customers, you need to invest more in advertising costs on Tiktok Shop. There are many forms of advertising on Tiktok Shop for sellers to choose from such as TikTok Shopping Ads, TikTok Carousel Ads, … However, to run the most effective advertising, you need to carefully consider the budget, and understand the needs and insights of customers to promote advertising activities.
Discount fee
This is the fee that sellers need to pay if they want Tiktok Shop to support them in providing promotional codes or discounts in addition to existing campaigns. Currently, TikTok Shop is supporting discount fees in the form of vouchers such as seller vouchers and Freeship vouchers. Sellers will receive these vouchers if they participate in the TikTok Seller Center program. This creates opportunities for sellers to set up promotional programs to attract and stimulate customers to shop.
Affiliate fee
This is the commission that sellers pay to KOC/KOLs when they upload videos with your products the product link is attached to their page, and successful orders are created from this link. This fee is agreed upon between the business or seller and the KOC/KOL. This fee varies depending on the influence of the KOC/KOL you hire on the product and your brand value.
Cost of building a TikTok channel for a brand
One of the costs of selling on Tiktok Shop that cannot be ignored is the cost of building a TikTok channel for a brand. This is very important because if the brand is known by many people, the number of potential customers will be expanded and sales will increase. To build an effective Tiktok channel, you need to understand the target customer, analyze trends and market needs to create a suitable content strategy. You not only need to build but also optimize the elements of the channel including information and content on the channel. Make sure to maintain and post content regularly and frequently to attract attention.
Livestream rental fee for sales
Many sellers have used livestreams on Tiktok Shop to increase their reach to target customers and increase the number of orders. If you do not have time or livestream skills, hire someone to do it. In case the business has good financial resources, it can cooperate with KOLs/KOCs and influencers to ask them to livestream to sell products. Although the cost is not low, the effectiveness that this activity brings to the seller is very large.
Things to note about selling costs on Tiktok Shop
Learning about the types of selling costs on the Tiktok Shop platform is important to manage and optimize business operations. Here are things you need to note about selling fees on this platform:
Only when the order is successfully delivered, the seller will pay a % of the selling fee to Tiktok Shop. This helps the seller not to have to pay unnecessary costs if there are problems during the shipping process.
If the seller creates a Voucher on Tiktok Shop to offer incentives and encourage customers to buy, there will be a fee.
To avoid being fined and increase the accuracy of delivery, the seller needs to provide accurate weight information. Because this not only affects the shipping fee calculation process but also ensures compliance with Tiktok Shop’s regulations.
Compared to other e-commerce platforms, Tiktok Shop’s potential and attractiveness are still large. Therefore, you need to learn about the types of sales costs on the Tiktok Shop platform to understand the types of platform costs to manage and develop business activities most effectively to maximize revenue and profit.
Please see more:
- How to make money on TikTok Shop simple, 100% successful?
- How to do Affiliate Marketing on TikTok Shop to bring revenue
- What is Topview TikTok advertising?
Frequently asked questions
Similar to other e-commerce platforms, when selling on Tiktok Shop, sellers will have to pay several fees. This is the transaction fee that the seller must pay to the Tiktok system to support and maintain the sales system. When the order is successfully delivered to the customer, Tiktok Shop will automatically deduct a fee from the order payment amount. Currently, the transaction fee on Tiktok Shop is 4% of the total order value including shipping fees.
In addition to the fixed transaction fee, sellers need to pay attention to several other sales costs on the platform such as the e-commerce platform tax of 1.5% (including 1% value-added tax & 0.5% personal income tax). The free shipping program fee is a program that allows applying TikTok Shop’s Xtra shipping voucher to all products in the seller’s store at 4.5%. In addition, there are marketing costs (running ads, Affiliates, Booking Livestream sales,…) along with shipping fees and building a TikTok channel.
