TikTok Shop & Shopify Connectors: The Complete Guide to TikTok Shop Sales, Fees, and Bookkeeping

TikTok has emerged as a powerhouse in the realm of ecommerce with the release of TikTok Shop, which revolutionizes the way brands engage with their target audience, showcase their products, and sell to their customers.

However, amidst this wave of innovation, there are also major unknowns plaguing ecommerce merchants.

• How much does TikTok Shop take from the sales?
• Should I connect TikTok Shop to Shopify or manage them separately? 
• Which TikTok Shop connector should I use? 
• How do I sync my Shopify products to TikTok Shop? 
• Whats an average TikTok Shop commission fee?

The list goes on ....

On top of all of the unknowns and uncertainty specifically related to TikTok Shop, you are also left with a gaping hole in understanding how to actually deal with TikTok Shop bookkeeping. How do you record your TikTok Shop sales, TikTok Shop discounts, and TikTok Shop fees? What about commission and affiliate fees? Product Samples?

And, don’t get me started on TikTok Shop COGS!

Your ecommerce bookkeeping is complicated enough without figuring out how to sync TikTok Shop to your books. 

In this post, we’ll help you understand the complexities and intricacies of setting up your TikTok Shop to scale — finding the best TikTok Shop connector, understanding your TikTok Shop fees, and managing your TikTok Shop bookkeeping.

To get there, we’ll cover what any and every ecommerce operator needs to know about selling on TikTok Shop, including:

1. The What: What is TikTok Shop?
2. The Why: Pros & Cons of selling on TikTok Shop
3. The How: How to connect TikTok Shop to Shopify
4. The How Much: Bookkeeping and Accounting for TikTok Shop Sales and TikTok Shop Fees

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The What: What is TikTok Shop?

Let’s start with the what before we dive into the why.

TikTok Shop is an ecommerce sales channel that allows brands to sell their products directly on TikTok through in-feed videos, LIVES, and the Showcase tab.

Imagine with me for a minute — you're watching a ‘get ready with me’ video. You see them use this amazing concealer and you think to yourself, “self, I wish I had an amazing concealer just like that. Look how she glows.” And then BAM, there is a link to the amazing concealer that will make you glow too.

By selling on TikTok Shop, sellers can connect with creators through an affiliate program. You can also expand your reach with Shop Ads and TikTok Shop even offers a Fulfilled by TikTok logistics solution to help get your products to your customers.

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The Why: Pros & Cons of Selling on TikTok Shop

While many Shopify brands are super excited about the launch of TikTok Shop, the decision to sell on this sales channel also comes with its costs. 

Let’s run through some of the pros and cons every ecommerce brand should consider before selling on TikTok Shop.

The Pros: The Benefits of TikTok Shop

1. Boost Your Brand Awareness

Looking to increase your customer base? Go where the people are. 

TikTok has over 1 billion monthly active users, with Americans 18+ spending an estimated 55.8 minutes a day on TikTok. This is a huge amount of potential customers you can now tap into.‍

2. Seamless Integration With Creators & Influencers

TikTok Shop pairs brands and products with content creators allowing for better engagement with potential customers.

3. Direct Access to Gen Z 

Selling on TikTok Shop allows you to reach a much younger demographic. This can be a pro for specific industries. Going back to our beauty brand example, TikTok has HUGE revenue potential for you. But, it’s not for everyone. If you’re selling mobility scooters, not sure you’ll find your target audience on TikTok. 

4. Lower CAC

As compared to Amazon, the cost-per-click (CPC) for TikTok Shop is based on referral sales so you only have to pay when a sale is actually made. This results is usually a lower customer acquisition cost or CAC.

The Cons: The Potential Downsides of TikTok Shop

1. Lack of Subscription Functionality

Many brands rely on subscriptions for a steady revenue stream. This inability in TikTok Shop could result in significant declines in your LTV. 

2. Increased Competition 

Many products sold on TikTok Shop are cheaper knock-offs. The knock-offs are manufactured by suppliers in China or Korea and sold for significantly lower prices. Having this increased competition could result in major pressure for you to reduce your prices too or risk losing customers.

3. Uncertainty of Long Term Sustainability

Is TikTok here to stay?

On March 13, 2024, a bill was passed by the U.S. House that could ban TikTok in the U.S. unless ByteDance sells it to another company.

The reason in a nutshell? The US of A is scared about how much data access the Chinese government has to American users and how they could use this data to influence them.

Here’s a pretty good summary tweeted by Jonathan Snow, the founder of the Snow Agency, a social media and influencer marketing company. This was posted on March 12, the day before the bill went to the U.S House Vote.

Update: On April 23, 2024, the Senate passed a bill broad package that includes foreign aid and also includes a provision that requires ByteDance, the Chinese owner of TikTok, to sell its stake in the company within the year.

The next step is for this bill to be signed by President Biden which he's expected to move forward with. Does this mean bye bye TikTok Shop? Not quite.

It does mean the beginning of a complex and likely draw out process where TikTok will likely fight the U.S. government and, if they don't succeed, will have to decide whether to divest or for TikTok to be banned in the U.S.

Decisions decisions.

For now, TikTok Shop is business as usual.

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4. Increasing TikTok Shop Fees

When TikTok Shop first launched, it was charging seller fees of only 2% of the price of each order + $0.30, resulting in significantly lower costs than selling on Amazon.

Now, it costs sellers more to sell on TikTok Shop. 

On April 1, 2024, TikTok Shop’s referral fees increased to 6% and will further increase to 8% on July 1, 2024. The referral fees include all TikTok Shop fees with the exception of shipping and taxes.

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The How: How to Connect TikTok Shop to Shopify

Once you've decided to sell on TikTok Shop, the focus shifts to creating the most sustainable process.

Many Shopify sellers prefer to connect TikTok Shop to Shopify so they can manage it all in one spot. It allows for centralized data management, such as relating to order management, pricing, and inventory. It also allows you to manage TikTok ads directly from Shopify.

The first step is to decide which TikTok Shop connector to use to connect TikTok Shop to Shopify.

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Best TikTok Shop Connectors for Shopify

While Shopify does have a native connector to TikTok Shop, there are several other options that many Shopify brands choose to use instead. 

Here is a list of the top 5 TikTok Shop connectors used by many of our customers:

1. Shopify Native TikTok Shop Integration

With over 15,000 reviews and an overall rating on the Shopify app store of 4.8. This is a solid choice to connect TikTok Shop to Shopify. 

Here are the key features:

• Easily build TikTok-style ads. Simply upload product images or videos.
• Install the TikTok Pixel in 1-click to measure the performance of your ads.
• Manage and track new orders by selling directly via TikTok Shop (US & UK only).

There are some sellers that found it to have limited features and some product syncing issues and instead decided to use a 3rd party connector.

Price: Free.

2. Silk Commerce (Silk for TikTok)

Silk Commerce was a very popular choice before Shopify came out with its native integration.

Its features include:

• Pulling product information from Shopify including product images, pricing, and quantity to TikTok Shop.
• Sync and fulfill orders from TikTok Shop to Shopify

While there are limited reviews available for this app, in general it seems to have more robust features than the native Shopify integration but some merchants found it to have syncing reliability issues and for it to be a bit less user friendly.

Price: Free for up to 100 orders. After that, pricing starts at $35/month for up to 500 orders.

3. ShoppeDance

There are also limited reviews available for using ShoppeDance to connect TikTok Shop to Shopify but many merchants are excited about its robust features and stellar support. 

Key features include: 

• Product syncing: Sync product/SKU with TikTok Shop with product customization
• Easy management: bulk edit product details with efficient product template
• Real-time inventory update: prevent overselling and safeguarding your revenue
• Streamline order fulfillment: sync order status and tracking numbers to TikTok
• Product bundle: Bundle your products for discounts and upselling opportunities

Price: Starts at $18/month for up to 100 orders.

4. Aftership Feed for TikTok Shop

Aftership Feed for TikTok Shop is rated a 4.8 on the Shopify app store with over 550 reviews. 

It has a user-friendly interface, easy installation, and efficient syncing of products from Shopify to TikTok Shop. On the other hand, there seems to be some mixed reviews about the support.

Features include:

• Automatic product sync – with one click, bulk edit products and category mapping
• Shopify compatibility – set-just-once templates to auto sync product listings
• Revenue protection – prevent overselling with pricing and inventory rules
• Streamlined management – with order tags, cancellation sync and product linking
• Seamless returns – with AfterShip Returns, Happy Returns, Loop, and more

Price: Free for syncing up to 10 TikTok orders a month. After that, it starts at $18/month for up to 100 orders.

5. SKU IQ

SKU IQ is rated as a 4.2 out of 5 stars on the Shopify app store out of 140+ reviews. Merchants like its ability to sync inventory from Shopify to TikTok Shop and find it to be helpful for order management.

Its features include:

• Real-time product, order and inventory syncing to your TikTok Shop or POS.
• Create once and sync what you want. Eliminate double-data entry.
• View and fulfill your TikTok Shop orders right in Shopify.
• Discover top customers and products and make informed business decisions.
• Hassle-free US-based support, plus onboarding consultation.

Pricing: If you don’t already have SKU IQ for other sales channels, the pricing starts from $45/month for up to 400 orders.

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Connecting TikTok Shop to Shopify

1. Set Up TikTok Shop

If you don’t have a TikTok Shop yet, start here. If not, you can skip to #2 on this list. In order to set up a TikTok Shop, you need to have a U.S. Store and a TikTok Business account. You’ll also need a return policy page on your Shopify store and your products need to meet TikTok’s product guidelines.

After that, you’ll need to add TikTok Shop as a sales channel to Shopify via the Shopify App Store and follow this step-by-step guide. For a more detailed set-up guide check out the TikTok for Shopify User Guide.‍

2. If Connecting TikTok Shop to Shopify, Add Your Shopify Connector

If you decide to connect your TikTok Shop to Shopify to sync orders, products, and inventory, go to the Shopify App Store and search for the applicable app. Then follow the instructions provided.

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The How Much: Bookkeeping & Accounting for TikTok Shop Sales & TikTok Shop Fees

While TikTok as a social media platform has a reputation of being entertaining and fun, selling on TikTok Shop opens up a whole new can of worms when it comes to ecommerce accounting. How do you set up your financial process to ensure you have real financial visibility into how your business is doing?

What You Need to Know About TikTok Shop Accounting

Let's dive into understanding each component of your TikTok Sales and how that actually translates to the cash that hits your bank.

TikTok Shop Sales

When you sell a product to a customer on TikTok Shop, it generally includes a few components that make up the sales price — you have your product price, reduced by any discounts, plus any shipping income or sales tax.

TikTok Shop works differently. Your TikTok Shop sales will include:

• Product item subtotal before discounts
• Minus: seller discounts
• Minus: TikTok Shop Discounts
• Plus: Shipping fees
• Minus: Seller shipping fee discounts
• Minus: TikTok Shop shipping fee discount
• Plus: Sales tax

Let's take a look at this example:

In this example you can see the merchant charges the customer $62 for the product itself, plus $6.50 for shipping, plus $3.72 for sales tax, bringing the total order value to $72.22. TikTok Shop provided additional discounts to the customer of $12.40 on the product cost and $6.50 for the shipping, resulting in a total customer payment of $53.32 ($72.22 - 12.40 - 6.50).

This is how the same order shows up in Shopify when connected with a TikTok Shop connector (in this case, AfterShip for TikTok Shop):

The complexity here is that in Shopify, you don't see the total TikTok Shop Platform Discount reflected. In other words, it shows Shipping of $0 instead of shipping of $6.50 with a TikTok Shop discount of $6.50. This is one of the key reasons many bookkeepers have trouble reconciling the actual TikTok payout to the cash collected that is displayed in Shopify.

TikTok Shop Fees

Now let's talk about the TikTok Shop fees. How much money does TikTok Shop actually take?

In the past, TikTok Shop took 2% of each sales + $0.30. As of April 1, 2024, the fee went up to 6% + $0.30, and starting July 1, 2024 it will increase to 8% + $0.30.

In this example, which is an order from 12/31/2023, a 2% fee applied and this is how it was calculated:

The total order price was $62 plus sales tax of $3.72. The TikTok Shop referral fee is 2% of this is $1.31 + $0.30 = Total referral fees of $1.61. If this same order took place between April and July, the total fee would be $4.24 and after July it would be $5.56!

TikTok Shop Sales Tax

Unlike Shopify, TikTok Shop is a marketplace facilitator similar to Amazon. This means it is responsible to calculate, charge, and remit sales tax on behalf of the merchant.

This is why, in the image above, the $3.72 of sales tax is not part of the settlement amount from TikTok Shop. Instead, TikTok Shop remits this directly to the relevant state tax authorities.

Does this mean TikTok Shop sales don't impact sales tax at all for merchants? Sorry, unfortunately this isn't the case.

While TikTok Shop sales won't result in a sales tax liability that you need to pay out, it can impact your nexus thresholds in specific states, requiring you to be liable for sales tax for your Shopify sales that didn't previously reach the necessary thresholds.

You can read more about the sales tax requirements for selling on a marketplace like Amazon or TikTok Shop versus selling on a non-marketplace platform like Shopify here.

TikTok Shop Payouts

So how much cash do you actually get from selling on TikTok Shop?

When TikTok Shop pays you, they add back all the TikTok Shop discounts. In other words, they took the $53.32 you collected, added back the $12.40 and $6.50 of TikTok Shop discounts for a total of $72.22 of revenue then reduce this by the referral fee of $1.61 and the sales tax collected of $3.72, resulting in a total TikTok Shop Payout of $66.89.

TikTok Shop Free Product Samples

Very often creators on TikTok Shop will request free product samples. These product sample orders are generally brought into Shopify as a regular sale with a 100% discount.

Here is an example of a free product sample order (taken from the Finaloop Orders screen):

In the above example, you can see a free sample that is synced from TikTok Shop to Shopify and then synced to Finaloop. In the example, you have sales of $29.99 and a discount of $29.99 resulting in net sales of $0.

From an accounting perspective, these can often overstate your actual sales and your discounts without giving you a clear picture of your actual revenue. Depending on your accounting set up, the best way to be able to view this is to exclude these orders from your sales and your discounts and instead record them as a marketing expense (or in certain cases, as cost of goods sold).

TikTok Shop Product COGS

Your TikTok Shop cost of good sold (COGS) should be measured by multiplying the landed cost per unit with the total quantity purchased.

The landed cost per unit should be the same as the cost per unit you use for your other sales channels. You can learn more about managing your inventory and tracking your COGS here.

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How to Best Manage Your TikTok Shop Sales

The release of TikTok Shop has been a game changer for many brands. There are many benefits for selling on TikTok Shop but it also will result in a lot of complexities when it comes to product syncing, order management, and your bookkeeping. 

The toughest complexity, which will likely resolve itself over time, is the uncertainty and lack of transparency at what the future holds for TikTok Shop sellers. 

Let’s sum up the uncertainty for you:

• Uncertainty as to whether TikTok in the US is around for the long run
• Uncertainty as to the reliability of the apps and TikTok Shop connectors
• Uncertainty as to how the increase in TikTok Shop fees will impact this sales channel for your brand.

There is one area that you don’t need to (and absolutely shouldn’t) have uncertainty or lack of visibility and that is when it comes to your TikTok Shop bookkeeping. 

Being able to see your finances in real-time by using a platform like Finaloop will help you protect yourself from the other uncertainties that inevitably come along with selling on TikTok Shop.

But, the higher the risk, the higher the reward and potential upside of selling on TikTok Shop is enormous.

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