TikTok Shop Is Taking a Bigger Cut From Sellers. Will It Alienate Brands?

tiktok shop
Shutterstock/RAEKA SINGGAR RAMADHAN Shutterstock/Yury1964

TikTok is set to take a larger cut of the sales they make from TikTok Shop — and it may not bode well for the future of the merchant platform.

As first discovered by The Information on Jan. 3, TikTok is increasing the commission they charge on items from 2% plus 30 cents per transaction to 8 percent per transaction.

But that’s not the only change creators and brands must get their heads around. As TikTok aims to cut spending on its shopping feature, the company is also reducing some of the subsidies it implemented to attract merchants to sell on the platform.

Creators shouldn’t panic too much, as sellers will seemingly continue determining their own affiliate rate for creators. But sellers will also, unfortunately, be negatively affected by this deal, hurting the influencer marketing ecosystem overall.

In turn, it’s likely TikTok’s increased commission rate will have a knock-on effect on creators in two ways.

First of all, brands might decide to sell their products elsewhere on cheaper merchant alternatives like Amazon or Shein, meaning that affiliate deals between brands and creators as a whole may be harder to come by on TikTok Shop.

Or, if merchants do decide to stick around, it’s possible some brands will lower the affiliate rates creators get (which currently range from around 5 to 20%, depending on the product) in response to TikTok’s higher cut. Or instead, brands may raise the prices of their products for buyers on TikTok Shop, potentially alienating consumers.

The reason TikTok Shop became a hotspot for merchants is because of the app’s low subsidy rate, but if they lose that, what’s to stop these brands from leaving TikTok just as quickly as they arrived? And in a world of Temu, Amazon, and Shein, customers may start looking for cheaper deals elsewhere.

Are you a creator affected by these changes to TikTok Shop? Email tips@passionfru.it to share your story.

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