TikTok Shop Seller Fee Increase Jan 2024: Things to note

Starting from 1st Jan 2024, TikTok Shop is set to increase seller fees from 3% to 4.36%. In this article, we break down what fees TikTok Shop sellers incur for every transaction.

As with all other marketplaces in Singapore such as Lazada and Shopee, TikTok Shop fees are comprised of 2 components: the Marketplace Commission Fee (2.18%) and the Transaction Fee (2.18%) which makes up the 4.36%.

Marketplace Commission Fee

This commission fee is essentially how TikTok Shop earns from being a platform for sellers to list their products. You can see it as a fee to use TikTok Shop to sell your products. Currently, this fee is only 1% (including GST) on all successful orders, however starting 1st Jan 2024, this fee will be increased to 2.18% (including GST) on all successful orders.

This fee is levied on the item price after any seller discounts, i.e. Marketplace Commission Fee = 2.18 % X (Item Price - Seller Discount). Key aspects of this fee include:

·         All sellers including local and cross-border sellers will be charged this fee

·         Any cancelled, returned or refunded orders will not be charged this fee

·         The calculation of the fee does not consider any TikTok Shop platform discount. For instance if TikTok gives a discount to buyers, sellers will still have to pay commission fee on the full price of the item, less any discounts the seller themselves provided.

We will provide an example on how the fees are calculated later on in this article.

Transaction Fee

This fee represents a fee for collecting and processing payment from your customers. Currently this fee is 2% (including GST) but will be increased to 2.18% (including GST) starting from 1st Jan 2024. Essentially, TikTok Shop is starting to charge GST on this 2% fee given the increase to 9% GST in Singapore in 2024.

Fees Calculation Example

In the example below, we calculate the seller fees for a 1KG item selling at a list price of $100. The seller provides a $2 discount, while TikTok provides a $5 discount. We included this to illustrate that as mentioned above, the Marketplace Commission Fee does not consider any discounts provided by TikTok themselves.

Do note that depending on the marketing program or affiliate program you have joined with TikTok Shop, there may be other fees that will be incurred per transaction. In this calculation, we focus on the increase in the Marketplace Commission and Transaction Fees.

How do these fees compare to other marketplaces?

Unlike Shopee and Lazada, which haven't announced fee increases beyond the GST hike in 2024, TikTok Shop's new rates may surprise sellers. However, it should be noted that TikTok Shop’s fees are actually in line with the fees levied currently by Shopee and Lazada as well.

Both Shopee and Lazada both currently charges 2% before GST for payment gateway / transaction fees. After GST increase in 2024, the charges will be 2.18%, which is the same amount TikTok Shop fees increased to.

Similarly, for commission fees, the base tier on both Shopee and Lazada is also 2% before GST. Depending on the type of seller account (eg. Shopee Mall vs Non-Mall), category of products (only applicable to Shopee), commission rates may be higher than 2%.

Additionally, other marketplaces may have other fees such as Service Fee on Shopee for joining their Coins Cashback or Free Shipping program, which will also affect your shipping fees as we discussed in our last article.

Conclusion

In conclusion, while the fee increases this time by TikTok Shop puts their fees on par with Shopee and Lazada, eventually they may have different additional fees for different marketing programs they may introduce. It is important as a seller to keep updated with the latest changes in fees structures of each sales channel you are selling on, so that you can measure your profitability accurately. We write articles like this occasionally when there are new updates from marketplaces and provide some analysis and advise for sellers.

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Disclaimer: This article represents the views and opinions of our company only. EMMA is not affiliated with, authorized, maintained, sponsored, or endorsed by TikTok or any of its affiliates or subsidiaries. Our analysis and conclusions are independent and not sponsored by TikTok in any way. The information presented here is based on publicly available data and our interpretation of TikTok 's programs as of the date of publication. While we strive to maintain accuracy, we cannot guarantee the completeness, reliability, or accuracy of the information. Readers are encouraged to conduct their own research and directly consult with TikTok to make informed decisions.