TikTok Shop Announces Major Fee Hike In 2024
TikTok Shop hit the ground running in 2023 with low initial fees and promotional fee waivers, but watch out - a major fee hike is in store for 2024!
Previously, TikTok charged a referral fee of 2% of the total payment plus $0.30 per transaction, with a promotional offer reducing the 2% to 0% from April 3 2023 though September 30, 2023.
Starting April 3, 2023 (GMT -8), sellers will benefit from a 0% referral rate for 90 days once they have achieved the "Active" status on Seller Center (completion of onboarding). After 90 days, sellers will be charged a referral fee per order calculated as: (2.0% * Customer Payment + Platform Discount) + 0.30 USD per order.
Sellers that have achieved "Active" status in Seller Center before or on April 3, 2023, will be eligible for 90 days for no referral fee (0%) for all qualified orders. The last day to be eligible for this promotion is September 30, 2023.
Sellers that were active prior to April 3, 2023 will not receive refunds of transaction fees that were previously charged. All orders completed before that date will be charged (2.9% * Customer Payment + Platform Discount) + 0.30 USD per order. Active sellers will have 90 days from April 3, 2023, 0:00 AM UTC-05:00 to enjoy the benefits of the promotion.
All sellers that achieve "Active" status in Seller Center starting on October 1, 2023, 00:00:00 AM UTC-05:00 will be charged on a per order basis, (2.0% * Customer Payment + Platform Discount) + 0.30 USD.
The 2% referral fee kicked back in starting in October and now TikTok has announced it will be increasing starting April 1, 2024.
Program Updates
Starting July 1, 2024, TikTok Shop will increase the referral fee on all qualified transactions to 8% per order*.To support you through this transition, TikTok Shop will increase the referral fee in increments. As such the referral fee will increase to 6% from April 1, 2024 to July 1, 2024 to help you align your approach accordingly. This transition period aims to ease the adjustment for all our valued sellers, ensuring a smoother integration into the updated fee structure.
*The following categories will adjust their current referral fee beginning April 1, 2024:
- Referral fee for Electronics will be adjusted to 6%
- Referral fee for Pre-owned will be adjusted to 5%
- Referral fee for Collectibles will be adjusted to 6%
All new sellers enrolled in promotional plans will continue on their respective plans until the conclusion of the promotional period.
These changes are designed to allow us to better serve customers while ensuring that we continue to provide great value.
TikTok has provided a full list of categories showing the transitional rate as of April 1 and the final rate as of July 1st and while most of them will end up at 8%, there are a few exceptions in several key segments.
Interestingly, the categories TikTok is choosing not to increase to 8% are several of the main verticals that eBay has been focused on with their "enthusiast buyer initiatives - underscoring that TikTok is still very much aiming to take market share in those coveted categories.
Liz Morton
The move comes at the same time TikTok is also cutting off subsidies they had provided to some sellers last year, according to The Information (paywall).
Theo Wayt
The new fees also come as TikTok has also been weaning sellers off subsidies following the holiday season. Taken together, the moves could prompt merchants to raise prices or stop selling on the app entirely, especially when faced with stiff competition from sites like Shein and Temu, which offer rock bottom prices.
During the holiday shopping season, TikTok had been applying discounts to many products listed on TikTok Shop while paying sellers the full price of items. While the discounts TikTok previously offered depended on the shopper and what product they were looking at, the current discounts are being limited to just a handful of best-selling items for some sellers, a person familiar with the changes said. TikTok also previously covered the cost of some returned TikTok Shop items in a limited program last summer prior to TikTok Shop’s official launch.
Have you shopped or sold on TikTok Shop? How will this fee increase impact your business on the platform? Let us know in the comments below!
Concerned
