530Currently, competition in the e-commerce sector is becoming increasingly fierce, especially overseas. Every update and adjustment of policies almost triggers a "major earthquake" among merchants, but at the same time, it often brings new opportunities and challenges.
Recently, TikTok Shop US has launched a brand-new initiative—the "Co-funded Free Shipping Program," which has attracted widespread attention and discussion.
So what exactly does this new policy entail? How should it be understood? What potential impact does it have on merchants? How should merchants respond to this change?
Overview of the New Policy
TikTok Shop US recently announced that starting from August 26, 2024, it will implement a new Co-funded Free Shipping Program. This initiative aims to reduce consumers' shopping costs by having the platform and sellers jointly bear the shipping fees, thereby enhancing the platform's competitiveness and user stickiness.
Specifically, when a buyer's order amount reaches a certain threshold, TikTok Shop will cover part of the shipping fee, while the remaining portion will be borne by the seller.
This strategy applies not only to local US merchants, but also to cross-border merchants with US entities and self-operated cross-border overseas warehouse merchants, but does not include fully managed cross-border merchants.
Highlights of the Co-funded Free Shipping Program
The core of this policy lies in enhancing the consumer shopping experience by reducing shipping costs. For consumers, free shipping means they can purchase products at a lower total cost, thus reducing the likelihood of abandoning purchases due to shipping fees. This will undoubtedly increase consumers' willingness to buy and boost order volume. In addition, the model of sharing shipping costs between the platform and sellers helps balance the interests of both parties, promoting a healthier e-commerce ecosystem.
What opportunities does this program offer to merchants?
1. Increase Sales
For merchants, the Co-funded Free Shipping Program is undoubtedly an important way to attract buyers. Free or low shipping fees are often one of the key factors influencing consumers' purchasing decisions. By participating in this program, merchants can significantly enhance the appeal of their products and increase sales. Especially for products with smaller profit margins, reducing shipping costs may be the key to closing a deal.
2. Boost Store Exposure
The Co-funded Free Shipping Program can not only increase sales but also boost store exposure. As an emerging e-commerce platform, TikTok Shop has a massive user base and strong traffic distribution capabilities. By participating in this program, merchants have the opportunity to receive more platform recommendations and traffic support, thereby increasing their store's visibility and influence.
3. Strengthen Market Penetration
TikTok Shop's influence in the US market is continuously expanding. By joining the Co-funded Free Shipping Program, merchants can better penetrate the local US market and increase their brand's market share. In addition, the policy requires store ratings not to be lower than 2.5, which also incentivizes merchants to improve service quality and customer satisfaction.
Are there challenges for merchants facing this program?
1. Financial Pressure
Although the Co-funded Free Shipping Program brings many opportunities for merchants, it also increases their financial pressure. Especially for small and newly settled merchants, the additional shipping cost burden may have a significant impact on their operating costs. Therefore, merchants need to carefully assess their financial situation to ensure they can remain profitable while participating in the program.
2. Increased Logistics Management Difficulty
Co-funded free shipping means an increase in logistics orders and higher logistics requirements. Merchants need to strengthen communication and coordination with logistics partners to ensure products are delivered to consumers on time and accurately, avoiding complaints and returns due to logistics issues. This poses a greater challenge to merchants' logistics management capabilities.
3. Competitive Disadvantage for Newly Registered Merchants
According to the policy, newly registered merchants are exempt from participating in the Co-funded Free Shipping Program due to the lack of experience scores. This may make it difficult for these merchants to enjoy the traffic dividends brought by the policy in the short term, putting them at a disadvantage in market competition.
What coping strategies can merchants adopt for this program?
1. Accurate Cost Calculation
Before deciding to participate in the Co-funded Free Shipping Program, merchants need to calculate the cost of each product in detail, including procurement, operation, and logistics costs. Through precise cost calculation, merchants can formulate reasonable pricing strategies to ensure profitability while offering free shipping services.
2. Optimize Logistics Partnerships
Establishing long-term and stable partnerships with reliable logistics providers is also a way to reduce costs and improve efficiency. Optimizing logistics management can help merchants maximize cost control while enjoying the order growth brought by co-funded free shipping.
3. Strengthen Market Research
By gaining in-depth insights into market demand and consumer preferences and selecting products accurately, merchants can better grasp market trends and enhance product competitiveness.
Conclusion
The Co-funded Free Shipping Program launched by TikTok Shop US is actually an opportunity for merchants. Merchants need to fully understand and adapt to this new policy, plan their operations strategically, and seize the initiative in a fiercely competitive market to achieve sustainable business growth. By accurately calculating costs, optimizing logistics partnerships, strengthening market research, and improving service quality, merchants can fully leverage this new policy to enhance their competitiveness and expand into broader market spaces.
