In this article, you will learn why social commerce is interesting for Amazon sellers and how to prepare for the launch of TikTok Shop. Although TikTok Shop is not yet available in Germany, it is worth familiarizing yourself with its features and benefits now to gain an advantage when it launches.
Meaning of Social Commerce
Social commerce is the combination of social media and e-commerce. Platforms like Instagram, Facebook, and TikTok allow users to purchase products directly within the platform through posts, stories, and videos. Erhebungen von Statista Digital Market Insights It is estimated that social commerce now accounts for almost 20% of total e-commerce and has more than doubled in the last five years. For online retailers who are not yet active on these platforms, this could open up new opportunities to showcase their products to a broader audience. Social commerce is also already relevant in Germany. Although e-commerce platforms like Amazon dominate, consumers are also using social media platforms for online shopping. According to the Future Shopper Report 2023 (p. 78) According to Wunderman Thompson Commerce, 48% of German online consumers have already purchased a product through social media. These trends confirm that social commerce is a sustainable development and not a passing hype.
When it comes to purchase intent across individual social media platforms, the Meta platforms Facebook and Instagram currently play a major role in Europe, followed by YouTube and TikTok. On Facebook and Instagram, retailers can upload product catalogs and tag products in their posts. Users click on these tags and receive detailed information about the products, the retailers, and shipping. The checkout process in Germany still takes place through external websites. In the USA, however, the entire purchasing process is already fully integrated into the Meta platforms.
What makes TikTok an important player in social commerce?
In addition to Facebook and Instagram, TikTok has become another heavyweight in the social media sector. According to the Digital 2024: April Global Statshot Report the service of the Chinese company ByteDance now has nearly 1.6 billion active user accounts worldwide (p. 201). In Germany alone, the short video platform had almost 23 million registered accounts of individuals over 18 years old in April 2024 (p. 292).
The immense reach, combined with the approach of seamlessly integrating the shopping experience into content consumption, makes TikTok an important player in the social commerce sector. This is highlighted by success stories such as the BookTok trend. This TikTok community, where users recommend, discuss, and review books, has significantly boosted book sales through viral trends.
TikTok Shop from the consumer's perspective
TikTok Shop integrates the entire purchasing process directly into the TikTok platform. Although users in Germany can discover products on TikTok, they are redirected to external online stores via links for the checkout process. TikTok Shop, on the other hand, ensures a seamless customer journey and removes barriers on the way to completing the transaction.
What do consumers see in the feed?
Users discover videos with products algorithm-based in the TikTok feed on the For You page. In so-called "shoppable videos ", products are integrated organically and are shown in use, for example. TikTok users can click on the products shown via a link and buy them immediately or add them to their shopping cart to continue shopping. Shoppable videos are marked with an orange shopping cart icon. Advertisements and paid collaborations have a gray banner with the word "sponsored".
TikTok Shop also offers Live Shopping Events, where sellers can interact with potential customers in real time. Products are demonstrated and users can buy them with just a few clicks.
The special Shop tab in the app serves as a virtual marketplace. Here, users can browse, explore categories, discover trend products and benefit from exclusive offers. The search function makes it possible to find products, brands or categories directly. Hashtags and product tags make it easier for potential customers to quickly find the products they are looking for.
On the Shop Page, TikTok users can find an overview of all products offered by a seller. The store can be customized in the brand design. There are filter options such as recommendations, bestsellers or new releases. The store range can also be sorted by category.
How does the checkout process work?
The checkout process is seamlessly integrated into the TikTok app. Users can buy products directly from videos or store pages without leaving the app. They can choose between the following payment methods: Credit/Debit Card, PayPal, Apple Pay, Google Pay, Klarna or Affirm.
TikTok processes the payment directly. Customers receive an email with the order confirmation after the purchase. As soon as the delivery has been completed by the retailer, another email with the delivery confirmation follows.
TikTok Shop from the seller's perspective
Where is TikTok Shop available?
TikTok Shop is currently available in the following regions:
- Asia: Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam
- North America: USA
- Europe: United Kingdom
It is not yet clear when the platform will be available in Germany. TikTok Shop was originally scheduled to launch in Germany, Spain, Italy, France, Ireland, Mexico and Brazil in July this year. However, according to Bloomberg reports, ByteDance has suspended its expansion plans indefinitely in order to focus fully on the US market and avert a ban on the TikTok app there.
Which products are suitable for Tik Tok Shop?
According to data from Aftership, the product categories of fashion and accessories, cosmetics and household goods currently generate the most sales on TikTok Shop. In principle, however, all products that can be presented attractively in short videos and are typically purchased online are suitable.
Sellers can prepare for the launch of TikTok Shop by using the TikTok Creative Center. There they can explore the top products on the platform and gain insights into the performance of advertisements. Various filter options help to analyze relevant data and gain valuable insights.
What are the options for running a TikTok Shop?
There are two main ways to sell on TikTok Shop:
- Owning your own shop: Setting up a seller account and managing the store independently via the backend Seller Center.
- Working with a TikTok Shop Partner (TSP): Hiring a service provider to take over the operation of the store.
TikTok Shop Partners are agencies that provide services for a brand's TikTok Shop. These include live streaming, short video content creation, API integration and fulfillment. TSPs can take over the entire operation of a TikTok Shop. They also offer consulting services and support in setting up and managing the TikTok Shop independently.
Which method is best?
- Own operation: This method is suitable if control over the store is to be retained, sufficient internal resources are available and there is experience in e-commerce and social media.
- Collaboration with a TSP: This option is beneficial if the store operation is to be outsourced in order to save time and benefit from the expertise of a third-party provider. TSPs offer various services, including the creation of short video content, which is particularly important on TikTok. Creating such videos can be time-consuming and demanding, which is why working with a TSP allows you to focus on your core business.
What are the registration requirements for TikTok Shop?
Both individuals and companies can register with TikTok Shop. Individuals usually need to provide valid identification documents. Companies must also provide company information such as company registration and address details. The exact requirements vary depending on the country.
Which fulfillment options are available?
Sellers who want to run their TikTok store themselves can choose between various fulfillment options:
Own shipping
In this case, TikTok only provides the buyer's address for shipping processing. The seller retains control and responsibility for inventory management, packaging and shipping.
Fulfilled by TikTok (FBT)
TikTok UK offers its own fulfillment service that provides several benefits for merchants:
- Same-day fulfillment: Orders placed by 7pm are processed the same day.
- Premium deliveries: Next day delivery available.
Retailers can store a selected quantity of their stock in a TikTok warehouse. When an order is placed, FBT takes care of picking, packing and shipping. However, there are some requirements:
- Retailers must be based in the UK.
- Parcels must not exceed 30 kg or 31.5 liters.
TikTok charges fees for warehousing, shipping and additional services, which are made up as follows:
- Fulfillment fee
- Storage fee (No fees if the storage period is less than 30 days.)
- Additional services
- Packaging materials
A full price list and a list of additional services are available via the TikTok Shop Academy.
Fulfillment by Amazon
Through integration with third-party tools such as WebBee, Amazon FBA can also be used for order fulfillment. Products are sent to Amazon's fulfillment centers and stored there until the order is placed in the TikTok store. Amazon then handles all aspects of order fulfillment. An active seller account is therefore a prerequisite for this option.
How high are the sales commissions?
On TikTok Shop UK there are no costs for setting up or listing products; only a sales commission is charged. If sellers upload a product within 60 days of account activation, they will receive a reduced commission of 1.8% for the first 90 days. After this period, the commission increases to 5%. In the US, the fee will increase to 8% as early as July 1, 2024.
The commission is calculated based on the item price, minus any seller discounts. Shipping fees and discounts granted by TikTok Shop are not taken into account when calculating the commission fee.
Formula: Commission fee (incl. VAT) = commission rate % x (item price - seller discount)
What advertising options are there?
Sellers on TikTok basically have two approaches to product promotion: creating their own content or working with influencers already active on TikTok.
Own content in connection with ad campaigns
Sellers can create their own video content on the platform, either independently or with the support of a TikTok Shop Partner. This content can then be distributed organically and optionally also advertised through ad campaigns. The campaign can be set up via the so-called "TikTok Ads Manager" and offers a number of customization options:
- in a first step, various advertising targets can be selected.
- The demographic settings are then adjusted to narrow down the target group by region, gender, age, language and interests.
- The budget and duration of the campaign are then defined. You can also specify whether the ad should only be shown at certain times.
- Up to 20 products can be selected and the corresponding short videos uploaded. Texts can be added to highlight special offers, for example. Interactive add-ons such as product cards or stickers lead the customer directly to the checkout.
- Finally, you can determine whether the videos should only appear as ads in the feed or also in the profile.
Collaboration with influencers
It is also possible to collaborate with influencers. These so-called TikTok Shop Affiliates show the products in short videos on their own profile, but link to the product in the seller's store. TikTok Shop offers a platform via the Seller Center that connects sellers and suitable influencers.
As a seller, you pay for the collaboration on a commission basis, i.e. per product sold. These organic contributions can also be supported by an advertising campaign. This involves the use of so-called Spark ads, which differ from normal In-Feed ads.
The advertising costs on TikTok are essentially based on two price structures: cost per thousand impressions (CPM) and cost per click (CPC). In 2024, the CPM for in-feed ads will start at 10 euros. Spark ads promoting organic content will start at CPM of 6 euros and CPC of 1 euro. These cost models support different advertising objectives, be it broad reach or high engagement.
- CPM (Cost per Thousand Impressions): Ideal for building brand awareness.
- CPC (Cost per Click): Suitable for increasing traffic and conversions.
When working with influencers, the commissions incurred must also be taken into account, which are negotiated individually. However, the original mediation between seller and content creator through the TikTok affiliate program is free of charge.
Summary
In summary, it can be said that social commerce already plays a significant role in e-commerce today. Platforms such as TikTok offer sellers new opportunities to present their products to a wide audience. Although TikTok Shop is not yet available in Germany, it is worthwhile for sellers to familiarize themselves with the functions and potential of this platform at an early stage.
