TikTok Shop (Loungewear) Profit Engine

TikTok Shop's referral fees are a silent profit killer. Don't just calculate the 5% commission; you must also account for the fixed per-transaction fee, which disproportionately affects low-ticket items. A $10 product with a $0.30 fixed fee plus 5% commission means your effective platform fee is 8%, not 5%. Always calculate your net margin after *all* platform costs, not just the headline percentage.

Offering a high affiliate commission (e.g., 20%+) isn't a cost; it's a marketing investment. In the TikTok ecosystem, creators are your ad delivery mechanism. A higher commission attracts better creators who generate more organic reach and sales, often at a lower effective CPA than paid ads. Calculate the lifetime value of a customer to determine the maximum commission you can afford to pay for user acquisition.

The 'Free Shipping' badge is a powerful conversion driver on TikTok. However, shipping is never truly free. You must either bake the cost into your product price or use TikTok's shipping subsidies effectively. Analyze your average order value and shipping zones to find the sweet spot where you can offer free shipping without eroding your entire margin. A slightly higher product price with free shipping often converts better than a lower price with separate shipping costs.