TikTok's Shop Is About To Get More Expensive: Company Increases Seller Fees, Ends Subsidies

TikTok is planning to increase its seller fees for the TikTok Shop to 8% from 2% plus a $.30 commission fee, according to The Information.

Last year, The Information reported the shop would lose TikTok more than $500 million as it grew its e-commerce vertical. 

According to the article, TikTok was also planning to ban users from posting links to products from outside retailers to boost sales to its platform. TikTok has ambitions to compete with its Chinese-operated sister app Douyin, which sells nearly $200 billion from its shop in China. 

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TikTok connects viewers to products directly on the app and the company ships the products to the customers. The company had to build a logistical network and warehouses throughout the U.S. and China to do this. 

But, if the shop can become a virtual mainstay for its 1 billion monthly users, it’s hard to imagine the company won’t profit from it over time.

Amazon.com, Inc. AMZN does more than $500 billion in U.S. e-commerce sales a year, according to Statisa. 

TikTok’s push into the U.S. e-commerce market comes as Montana became the first state to ban the app.

The ban was set to take effect at the first of this year (2024), but a federal judge blocked the ban based on constitutional concerns. Montana officials announced on Tuesday that the state will appeal the judgment. 

Other states, including Texas and Tennesee, have enacted bans that prohibit state government officials and employees from using the app. 

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