TikTok Shop Is Loud, But Loud Is Not the Same as Profitable
TikTok Shop is one of the loudest channels in e-commerce right now.
Everyone has a take. Everyone has screenshots. Everyone has a thread explaining why this is where brands have to be.
We leaned into TikTok Shop last year and drove a little over $500,000 in revenue. That number gets attention quickly. The part that deserves more attention is how hard that revenue was to make work on a unit level.
Revenue is easy to post. The economics underneath it are much easier to ignore.
This is not an argument that TikTok Shop cannot work. It is an argument that the bar is higher than the hype suggests, and higher than many brands are modeling honestly.
What Actually Worked at the Beginning
It took several iterations before anything worked consistently.
The approach that held up best was simple. We sent product to creators. They made videos reviewing or discussing it. They tagged the product so viewers could buy directly from the post.
For most of last year, TikTok heavily favored that behavior. Creator content that tagged products routinely outperformed our own organic posts, even when our videos were stronger across production, messaging, and clarity.
The reason was not creative quality. It was distribution.
TikTok wanted creators participating in commerce, and it rewarded that participation. If a creator tagged a product, the platform pushed that content harder. Reach was the incentive.
For a while, the platform itself did a meaningful portion of the work.
Why That Stopped Working
Over the past several months, performance from creator-tagged content fell off. Videos that once drove steady sales stopped getting reach. Revenue followed.
This was not random. It was the platform growing up.
Every major platform follows the same pattern. First, it over-incentivizes behavior. Then it normalizes that behavior. Finally, it charges for distribution.
TikTok Shop is now firmly in that final phase.
If you want reach today, you pay for it.
Organic lift still exists, but it is no longer something you can rely on as a system. Paid distribution has become a requirement, not a lever you pull occasionally.
The Economics Are the Real Story
Once we started modeling TikTok Shop ads seriously, the math became impossible to ignore.
Even on a product with strong margins, the path to profitability is narrow.
The product normally retails for $119. To compete on TikTok Shop, it needs to be discounted. In our case, that meant $99 before a single fee, commission, or ad dollar was applied.
That discount is table stakes. If you do not price competitively, you do not get conversion.
From there, the costs stack quickly.
How Costs Actually Add Up
By the time a sale clears, you are accounting for a discounted product price, free or subsidized shipping to protect conversion, TikTok platform fees, creator commissions, cost of goods sold, and paid ads to generate reach.
Each of these costs makes sense on its own. None of them are unreasonable in isolation.
The problem is that TikTok Shop requires all of them at the same time.
Why a 3x ROAS Is Not Profitable
This is where most conversations around TikTok Shop lose clarity.
At roughly a 3x ROAS, the business is not profitable. It is simply not losing money. That distinction matters.
To reach our standard acceptable margins, the model requires a ROAS north of 7x.
That is not a casual benchmark. That is near perfect performance, sustained.
This is on a product with a 76.67 percent gross margin at full retail. Many brands do not start with margins that strong. For them, the math is even tighter.
The Part Brands Should Slow Down On
TikTok Shop asks for multiple concessions at the same time.
Lower price. Free shipping. Platform fees. Creator payouts. Paid distribution.
Individually, each one is defensible. Collectively, they leave very little room to operate.
This is the part that gets lost when people share revenue screenshots. Screenshots do not show how thin the margin for error really is.
What TikTok Shop Is Becoming
None of this means TikTok Shop is broken. It means it is becoming normal.
It is moving toward the same place every major platform eventually reaches. Distribution is no longer free. Performance has to be bought. Efficiency matters more than excitement.
If the numbers only work with near-perfect performance, the channel is not a growth engine. It is a risk that needs to be priced accordingly.
Revenue is easy to show. Sustainable unit economics are harder to build.
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