TikTok Shop to Raise Commission Fee from 2% to 8%

TikTok Shop will raise its commission fee in April and July 2024, reduce its spending on merchant subsidies, and charge 30 cents per transaction.

TikTok continues aggressively pursuing the growth of its booming e-commerce arm, TikTok Shop. For 2024, this will mean some major changes.

Most importantly, TikTok Shop’s commission fee will rise from 2% to 8% in 2024, and will charge 30 cents per transaction, reports Erin Cabrey of Retail Brew.

While this is lower than the fees charged by Amazon, it is still a lurch in that direction. The rise will not happen immediately. TikTok Shop’s commission fee will rise to 6% on April 1st and 8% on July 1st.

It’s also worth noting that TikTok Shop will take a smaller percentage from expensive products and certain sales over $10,000.

TikTok Shop will also reduce the subsidies it offers merchants to encourage them to join the platform. Supposedly, TikTok Shop spent around $500 million on merchant subsidies in 2023.

All in all, it will mean that many sellers will be unable to offer the same ultra-low prices they have been able to. However, the changes will put TikTok Shop in a better financial position to grow the e-commerce side of their business.

TikTok Shop is on track to supposedly bring in around $20 billion in global sales in 2023. 

Interestingly, according to a report by Jasmine Enberg of Insider Intelligence, TikTok Shop might not be doing as well as previously thought.

According to Enberg, when US adults were asked which social networks they were likely to make purchases, 46% of respondents said YouTube, while 40% responded with Instagram, followed by 36% for TikTok Shop.

When Gen Z was asked, TikTok Shop tied with YouTube at 68%, while Instagram accounted for the highest percentage at 71%.

Enberg notes that while TikTok Shop is popular among Gen Z, the uptake of living shopping has been slower than expected, and the possibility of a US ban is still on the table.

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