Earlier this year, TikTok’s expansion into the US market became a focal point for cross-border e-commerce. However, the requirement for each store to achieve an annual turnover of $2 million excluded many sellers from participating. On June 13th, TikTok updated its entry standards for the US market, broadening the recruitment scope for cross-border small shops, particularly targeting sellers with business entities in mainland China and Hong Kong. This move has sparked excitement among cross-border sellers, leading to a surge in registration applications.
TikTok Shop Entry Standards
TikTok Shop has updated its entry criteria, providing more opportunities for sellers across different platforms. Here’s a breakdown of the current entry requirements based on the seller’s platform:
Amazon Sellers on the U.S. Platform
• Self-Operation Model (SC):
• Store rating must be at least 4.0.
• Categories like furniture, menswear, and underwear require a rating of at least 3.8.
• The store should have been operational for at least three months.
• The account health score should be above 250.
• Supply Mode (VC):
• Must provide Amazon supply records for the past six months.
eBay/Walmart Sellers on the U.S. Platform
• Self-Operation Model:
• The GMV (Gross Merchandise Value) for a single store must be at least $500,000 over the past 12 months.
• The store must be operational for at least three months.
• On eBay, the store must have a positive rating of 90% or higher.
• On Walmart, the store score must be 4 stars or more.
• Supply Mode:
• Must provide Walmart supply records for the past six months.
Independent DTC (Direct-to-Consumer) Sellers in the U.S. Market
• Trustpilot Rating: Must be no less than 3.8.
• Social Media Followers: The total number of followers across major overseas social media platforms should exceed 10,000.
Additional Requirements • Consistency: The business entity listed on Amazon/eBay/Walmart/independent sites must match the entity entering TikTok Shop.
Impact of Removing Entry Barriers
The removal of the $2 million entry threshold has generated significant interest among Amazon sellers. Many sellers who faced challenges on Amazon are now exploring TikTok Shop as an alternative platform. The relaxed entry requirements are seen as a strategic move by TikTok to attract a broader range of sellers and foster a competitive environment.
This shift aims to provide sellers with more opportunities to diversify their sales channels and reach wider audiences, potentially enhancing their market presence and performance.
Why Did TikTok Lower Entry Barriers?
Reasons for Relaxed Requirements
The initial $2 million sales threshold for TikTok Shop might have deterred potential sellers, making the relaxation of this requirement a strategic move. The original benchmark could have been intended to test the platform’s capacity and ensure quality, but as TikTok’s market position and operational needs evolved, it became clear that lowering the entry barriers was necessary. This adjustment aligns with industry trends, such as Walmart’s move to eliminate performance requirements for seller registration, aiming to attract a broader range of participants. TikTok’s decision mirrors similar strategies to attract more sellers and enhance platform growth.
TikTok’s Ambitious Goals
TikTok has set a bold target to expand its business scale to $17.5 billion, requiring a significant increase in its seller base. Lowering entry barriers is a crucial step towards achieving this goal. By making it easier for more sellers to join, TikTok aims to boost its Gross Merchandise Value (GMV) and accelerate its growth trajectory. This strategy will help TikTok compete more effectively in the e-commerce space and attract a diverse range of products and sellers.
Sellers’ Adaptability on Different Platforms
Despite the lowered entry barriers, managing inventory in overseas warehouses presents challenges for sellers. Their adaptability varies depending on their platform experience:
• Amazon Sellers: Over 90% of North American Amazon sellers use Fulfillment by Amazon (FBA), providing them with a solid understanding of overseas stocking and logistics. This experience aligns well with TikTok’s operational model, facilitating a smoother transition for these sellers.
• eBay Sellers: Many eBay sellers use self-shipping methods, giving them greater control over their logistics and inventory management. This flexibility allows eBay sellers to adapt to new platforms like TikTok with relative ease.
• Walmart Sellers: Walmart requires local shipping or the use of Walmart Fulfillment Services (WFS), though actual implementation is often limited. Walmart sellers may face more challenges adapting to TikTok’s fulfillment model compared to Amazon and eBay sellers.
Specific Adjustments
TikTok has relaxed store performance requirements for Amazon sellers but maintains certain standards for eBay and Walmart sellers. This approach offers more opportunities for Amazon sellers while encouraging eBay and Walmart sellers to enhance their performance to meet TikTok’s criteria.
Sellers and Platforms Achieving Success Together
Platforms Lower Entry Barriers
By reducing the entry barriers, TikTok is attracting a significant number of sellers and brands to join, enriching the variety of products available. This adjustment provides an opportunity for sellers who previously did not meet performance standards to benefit from growth opportunities and boost their sales performance.
Changes in Market Structure
With the influx of new sellers, early adopters on the platform will face changes in the market landscape. On one hand, category competition will intensify, and on the other hand, the platform’s services will likely shift towards the Pareto principle, favoring the top-performing sellers. However, as TikTok’s market expands, it can accommodate more sellers engaging in sales activities.
Some sellers have noted that, given the prevalent consumer habits of TV shopping among American users, the widespread adoption of TikTok’s live-streaming e-commerce is only a matter of time. Compared to the impulsive spikes in sales driven by short video marketing, live-streaming sales are more controllable in terms of traffic data and sales performance.
TikTok’s Growth in the U.S. Market
Many merchants hold a positive outlook on TikTok’s future growth in the U.S. market. The recently concluded summer sales event further boosted TikTok’s popularity. TikTok Shop reported that the peak daily GMV during the U.S. promotion exceeded last year’s Black Friday sales, with overall platform GMV growth of 129%, content-based GMV growth of 129%, and shelf-based GMV growth of 132%. Live-streaming data also reached new highs, with streamer Stormi achieving sales of over $1 million in a single session, setting a new record for live-streaming sales in the U.S.
During major promotional events, fully managed sellers saw a 141% increase in sales compared to the previous year, with total payment amounts rising by 136% and live-streaming sales up by 194%. A variety of hot-selling categories emerged, with self-operated sellers experiencing explosive growth, orders up by 134%, payments by 133%, and active sales items by 114%. The top ten hot-selling items included eyelash kits, women’s one-piece swimsuits, in-ear Bluetooth earphones, electric shavers, floral wide-leg jumpsuits, three-piece furniture sets, ice makers, women’s shapewear, car emergency chargers, and mini desktop treadmills.
TikTok’s Support Policies
TikTok is beginning to send positive signals by introducing the “100 Million Club” special policy in early June, aimed at assisting cross-border self-operated merchants in increasing sales in the U.S. market.
Intensifying Competition and Responses
As more merchants flock to TikTok, competition is becoming increasingly fierce. For example, Sweet Furniture has recognized that sufficient inventory and a responsive supply chain are key factors for success in TikTok’s content-driven e-commerce. If you have domestic warehousing and logistics capabilities in the U.S., you will have a distinct advantage in terms of timeliness.
In the self-stocked overseas model, sellers typically face challenges related to inventory, logistics, and associated costs. Thus, accurate market trend forecasting is crucial. If a store experiences a sudden surge in orders and the warehouse’s shipping capacity cannot keep up, it could result in significant losses.
Currently, TikTok does not offer an official overseas warehouse service, so sellers must independently find reliable service providers, prioritizing those with strong reputations and excellent service.
By lowering entry barriers, offering supportive policies, and recognizing the need for efficient logistics, TikTok aims to foster a competitive and vibrant marketplace that benefits both sellers and consumers.
Temu Instructs Sellers to Comply with FCC Regulations
Strengthening FCC Certification Verification
Temu has recently announced that it will enhance the verification of FCC certification for products sold in the U.S. market. The platform will implement strict compliance measures regarding U.S. FCC documentation, including proactive responses to regulatory requirements, issuing risk alerts to buyers, removing non-compliant products from sale, and notifying buyers to either destroy or return affected products.
What is FCC Certification?
The Federal Communications Commission (FCC) is an independent agency of the U.S. government established in 1934. The FCC oversees the regulation of communications by radio, television, wire, satellite, and cable. According to the U.S. Code of Federal Regulations (CFR 47), most electronic products entering the U.S. market require FCC certification. This certification ensures that products comply with electromagnetic compatibility standards, wireless spectrum usage, and communication performance to maintain public safety and efficient wireless communications.
FCC Certification Product Scope
FCC certification is required for a broad range of electronic products, including:
• Radio equipment
• Electronic communication devices
• Household appliances
• Computers and peripheral equipment
• Audio and video devices
Temu’s FCC Certification Requirements
• Supplier Requirements: All products listed on Temu must have FCC certification. Suppliers must provide a valid FCC certificate to sell on the platform.
• Onboarding Review Requirements: During the supplier onboarding process, Temu will only approve products that have obtained FCC certification.
• Ongoing Supervision: Temu will conduct regular inspections of the FCC certification status for products sold on the platform. Non-compliant products will lead to corrective actions being required from suppliers.
Conclusion
Temu’s initiative to strengthen FCC certification verification and enforce compliance ensures that products sold in the U.S. meet regulatory standards. This measure protects consumer safety and enhances the platform’s reputation for quality. Suppliers must comply with these regulations to prevent disruptions in their sales operations and avoid potential compliance issues.
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