Amazon sellers choosing TikTok Shop reflects a growing trend as rising fees, increased complexity, and declining profitability on Amazon push them to seek more lucrative and manageable sales channels.
Selling on Amazon has always been a steady way for entrepreneurs to build successful businesses, but 2024 has seen a noticeable shift.
In 2024, the number of active Amazon sellers has declined to 1.65 million, down from 2.3 million in 2023, reflecting a notable decrease in seller activity on the platform.
These changes have pushed many sellers to explore other platforms, particularly TikTok Shop, which offers lower fees and a simpler selling experience. This shift is driven by the need to protect profits, reduce complexity, and maintain control over businesses.
TikTok Shop offers a new, more profitable opportunity for sellers who once relied heavily on Amazon.
1. Amazon's Fee Hike Fuels Seller Frustration
ModernRetailAmazon sellers are under pressure this year (2024), as they are feeling squeezed by a variety of fees.
Amazon’s decision to impose a slew of new fees, including an inbound placement fee that penalizes sellers for not splitting inventory across the country, sparked widespread outrage. These fees, combined with existing costs, significantly eroded profit margins for many sellers.
Low Inventory Fee
Sellers face unexpected charges when inventory falls below 28 days of supply, causing confusion and frustration.
Fee Delay
Amazon delayed the fee until May 2024, but transitionary fees and credits leave sellers uncertain about costs.
Impact on Seasonal Items
Seasonal products are hit with fees as they near stockouts, leaving sellers unsure whether to discontinue or risk additional charges.
Seller Support Issues
Inadequate responses from Seller Support leave basic questions about fee calculations and inventory management unresolved.
Rising Costs
With fees exceeding 40% for some, rising costs are shrinking margins, prompting sellers to seek alternatives like TikTok Shop.
2. Increased Complexity Makes Selling on Amazon Difficult
Navigating Amazon’s platform has become increasingly challenging. Constant policy changes and a complex fee structure add significant administrative burdens for sellers. This complexity makes it difficult to run a successful business on the platform.
Seller Support Challenges
Amazon’s complicated policies and lack of transparency make it difficult for sellers to navigate the platform. Many sellers report receiving inadequate responses from Seller Support when seeking clarity on fees and policies.
Complex Listing Requirements
Getting listings approved requires sellers to navigate a maze of product data, description, and shipping requirements. Failing to meet these can lead to account suspension or listings being de-prioritized.
Struggles with Advertising
Amazon’s paid marketing system is challenging to master. Sellers often feel lost when trying to drive traffic to their listings or manage ad campaigns effectively, leading to wasted ad spend.
Unpredictable Fees
Rising and unpredictable fees, such as the low inventory fee and fulfillment costs, make it harder for sellers to maintain healthy margins, especially when Amazon’s cost structure continuously changes.
Limited Control Over Business
Sellers often face difficulty in maintaining control over their businesses, with account suspensions and shadow bans as the result of minor mistakes. This adds to the frustration of working within a platform that operates with little seller support or clarity.
3. Declining Profitability Pushes Sellers to Seek Alternatives
With rising costs and shrinking margins, profitability on Amazon is becoming increasingly difficult for sellers.
- Rising Competition
What starts as a low-competition product opportunity quickly attracts other sellers, forcing price cuts and diminishing profits.
- High Amazon Fees
Amazon takes about 33% of each sale, reducing the margin that sellers can keep.
- Focus on Revenue, Not Profit
Sellers often focus on top-line revenue without accounting for the impact of fees and competition on their actual profits.
- Challenges with Margin
Even with lower-cost products, the cost of competition and Amazon’s fees make it hard to maintain healthy margins.
4. TikTok Shop Offers a More Attractive Alternative
CNBCRetailers and brands continue to invest in TikTok Shop even though a potential Jan. 19 ban grows nearer.
More Amazon sellers are exploring TikTok Shop as a new platform due to its unique opportunities. Here’s what attracts them:
Lower Fees
TikTok Shop charges significantly lower fees compared to Amazon (around 5% vs. 20%), leading to better profit margins.
Viral Product Potential
TikTok Shop’s integration with viral content allows products to reach massive audiences organically, without the need for costly ads.
Direct Engagement with Customers
Sellers can directly connect with buyers and influencers on TikTok, fostering deeper relationships and better customer interactions.
Easier Influencer Collaboration
TikTok Shop offers an affiliate program that makes it simple for sellers to collaborate with creators, leveraging their audience to boost sales.
- Low Barrier to Entry
Setting up a TikTok Shop is simple, especially for those with an existing TikTok account. It’s easy to create a business account and set up a shop, even if you don’t have a large following.
5. Competition from Other Marketplaces Intensifies
As competition in e-commerce grows, sellers are exploring alternative platforms to expand their reach. Here’s a snapshot of key Amazon competitors aside from TikTok Shop:
- eBay
Offers auction-style sales alongside fixed-price listings, providing a unique approach for selling diverse products.
- Walmart
Leverages its vast retail presence and lower fees to attract sellers seeking omnichannel opportunities.
- Flipkart
Dominates the Indian market with its earned loyalty program and increasing revenue growth.
- Target
Focuses on a loyal customer base with same-day delivery and enhanced online shopping options.
- Alibaba Group
Competes globally with subsidiaries like AliExpress and Tmall, offering competitive prices and vast product categories.
- Otto
Strong in the European market, particularly for furniture and home furnishings.
- JD.com
Excels in bulk purchasing and logistics in China, creating an edge for sellers in the region.
- Rakuten
Attracts sellers with its cashback model and integrated ecosystem, including financial and streaming services.
Leverage The Power of Going Omnichannel
As Amazon sellers explore TikTok Shop and other platforms, adopting an omnichannel strategy has become essential for success. Offering a seamless shopping experience across multiple channels—both digital and physical—can transform your business.
- Maximize Reach
Engage with customers on platforms they already use, such as social media, marketplaces, and physical stores.
- Boost Revenue
Sellers leveraging multiple channels see an average revenue increase of 190%.
- Enhance Efficiency
Streamline operations while improving inventory turnover and customer satisfaction.
- Build Loyalty
Provide what customers need, when and where they need it, to increase lifetime value.
Omnichannel isn’t about being everywhere—it’s about being where your customers are.
Amazon Sellers Choosing TikTok Shop Q&As
Grow Your Business with Amazon and TikTok
Why choose only one platform when you can use both to maximize your business growth?
- Establish a TikTok Presence
Focus on genuine, engaging content that resonates with your target audience. Identify and target specific communities within TikTok to maximize your reach.
- Leverage TikTok Affiliates
Partner with influencers to promote your products. Drive traffic from TikTok to your Amazon listings.
- Optimize Amazon Listings:
Use keywords and language that align with your TikTok content. Utilize Amazon PPC to reach customers who have engaged with your TikTok content.
- Overcome Challenges:
Partner with an Amazon agency to navigate the complexities of both platforms and optimize your campaigns for maximum ROI. Experts can help you better understand the unique nuances of each platform and tailor your strategies accordingly.
