TikTok Shop's fate has been extended in Europe

Author: TT123 Cross-border E-commerce

Image source | Unsplash

Last weekend, U.S. Vice President Vance stated in a media dialogue that the ownership transaction agreement for TikTok is expected to reach general terms by April 5, adding a bit of certainty to TikTok's business in the U.S. or potential acquisition.

This time, TikTok is no longer dragging sellers into the "fire sea," but is turning to a new battlefield, restarting its life.

TikTok Shop Updates Entry Requirements for European Sites

TT123 has learned that recently, TikTok Shop officially updated the entry requirements for cross-border stores in the EU (Germany, Spain, France, Italy) and the UK.

1. TikTok Shop EU (Germany, Spain, France, Italy) Cross-border Self-operated Store Entry Requirements

Entry Threshold:

. Local warehousing and logistics capabilities;

. Compliance operating qualifications (the entry entity must have a local VAT number);

. E-commerce operation experience (supporting experience in mainstream e-commerce platforms, including mainstream cross-border e-commerce platforms, independent sites, etc.);

. Healthy operating indicators must be met.

2. TikTok Shop UK Cross-border Self-operated Store Entry Requirements

Entry Threshold:

. Support merchants with operational experience on platforms such as Amazon, Walmart, eBay, Wayfair, Temu, Shein, AliExpress, Onbuy, DTC independent sites to enter, and also support merchants operating TikTok Shop's U.S. cross-border stores;

. The operating entity of other e-commerce platform stores must be consistent with the entity entering TikTok Shop;

. Must meet third-party platform store rating requirements and have an operating duration of more than 3 months;

. Entry requires providing a UK VAT number, limited to company entities; individual businesses and sole proprietorship licenses are not currently supported for entry;

. Must meet local shipping requirements in the UK.

Image source: TikTok Shop

According to the latest entry rules, the qualification for TikTok Shop EU (Germany, Spain, France, Italy) and UK cross-border store entry has been relaxed from only local sellers to include entities from mainland China & Hong Kong. This change is similar to TikTok Shop's reduction of entry thresholds for the U.S. region last November, and the official move is related to TikTok's "deadline approaching" in the U.S Last week, U.S. Vice President Vance stated in a media dialogue that the ownership transaction agreement for TikTok is expected to reach general terms by April 5. He also emphasized that he does not wish for U.S. authorities to delay the implementation of a ban on TikTok again, but if the sale is not completed, they will consider postponing it once more. Although it may seem like typical political rhetoric on the surface, after careful scrutiny, most believe that Vance's remarks indicate that the sale of TikTok's U.S. operations is a foregone conclusion.

TT123 has learned that the latest news shows that the "strongest" competitor in the TikTok acquisition case, Oracle Corporation, is evaluating a proposal regarding the sale of TikTok's U.S. business. This proposal suggests that Oracle would provide security guarantees and hold a small stake in the new U.S. entity, while potentially allowing TikTok's core algorithm to remain under the control of a Chinese company to ensure user data security and avoid the app being banned.

From a timeline perspective, the acquisition of TikTok's U.S. business is progressing in an orderly manner, causing anxiety to resurface for TikTok's sellers witnessing all of this. Even if TikTok can retain its U.S. market, the separation of TikTok's core algorithm and the loss of TikTok as the operator will have a significant impact on the sellers. Additionally, the increasingly intense "hostility" from the U.S. government towards China is another source of anxiety for the sellers.

On March 17, the U.S. Customs and Border Protection (CBP) announced an important notice through its Cargo System Messaging Service (CSMS): starting in September, U.S. Customs will further strengthen the entry supervision of low-value packages under $800, and packages with incomplete information may be returned directly. It is well known that small package sellers are among the biggest beneficiaries of the U.S. $800 tax exemption policy, and this policy update is seen as a way to tighten control over sellers. Now, this policy has already created a ripple effect, with Amazon quickly sending out emails to sellers to prepare them in advance.

Source: Amazon mass email to sellers

TikTok is facing a second crisis in the U.S., and this time, the "hero" stepping up to the challenge has changed to European sellers.

TikTok is thriving in Europe

Currently, it seems premature for Europe to take over as the "treasure" of TikTok sellers from the U.S., but recent data indicators from TikTok in Europe suggest that there is indeed hope for European sellers to meet their expectations.

Recently, TikTok released the latest data report for the EU region. The data shows that TikTok's monthly active user count in the EU has reached approximately 159.1 million. Compared to the previous reporting period (official data disclosed in October 2024), TikTok's monthly active user count in the EU has increased by about 9 million Among them, France, Germany, Italy, and Spain contributed the most new monthly active users to TikTok during the reporting period, and they are also the countries with the largest user retention for TikTok in Europe.

Source: musically

According to TeKan, as of March 20, TikTok Shop's sales in the UK reached $112 million, with daily sales averaging $5.9 million, a month-on-month increase of 8.36%. In the Spanish site, TikTok Shop's sales growth is also very impressive. As of March 20, sales on the Spanish site reached $2.01 million, a significant increase from $836,000 in February; additionally, daily sales reached $105,000, a month-on-month surge of 254.63%.

Source: TeKan

The recent popularity of TikTok Shop in the European market has kept TikTok's operations very busy. TT123 learned that on Xiaohongshu, a TikTok operator for the European site complained that their backend was flooded with private messages from influencers, and during peak times, they had to connect with nearly 700 influencers in a day. When videos are not updated, they are busy sending samples, expressing their struggles as workers.

Source: Xiaohongshu

Whether it's the impressive performance reports from new and old sites or the influencers rushing to PR themselves just for a ticket to enter the sales arena, it's clear that TikTok Shop is increasingly promising in Europe. According to TikTok Shop's plan, starting in March, the Italian, German, and French sites will be launched successively. If sellers have a company entity in Spain, Germany, France, or Italy and choose to settle in the corresponding site, they can open sub-stores in the other three countries, achieving sales across the entire EU. The grand vision of selling in five countries from one store is gradually being realized.

Although the ideal is promising, the headwinds of reality still give sellers a jolt.

According to the new regulations issued in Italy on December 9, 2024, in addition to meeting the previously established conditions to become a tax representative, tax representatives must also provide a guarantee to the tax bureau to obtain qualification. This guarantee can be paid through government bonds, bank guarantees, etc., and must be kept for at least 48 months It is expected that all deposits must be paid in full by April to June 2025. If not paid on time, the tax bureau will automatically cancel all VAT and IOSS tax numbers under the tax representative's name.

Source: News Screenshot

VAT is one of the basic thresholds for sellers to join TikTok Shop and other e-commerce platforms, and the requirement for tax representatives to pay additional deposits undoubtedly increases the costs for sellers, especially for small and medium-sized sellers, as €30,000 is not a small amount. In response, some sellers have initiated protests, hoping to unite the strength of many sellers to sue the Italian tax bureau to revoke the decision, but so far, no effective results have been achieved.

Source: Seller Disclosure

In Germany, the second-largest e-commerce market in Europe, sellers also face some dilemmas to resolve.

Germany, as the second-largest e-commerce market in Europe, has a high average order value and strong online shopping intentions, making it attractive for many cross-border sellers. According to an analysis by German trade media Neuhandeln, in 2022, the average shipping cost for the top 100 online sellers in Germany was €3.92, which is expected to increase to €4.39 by the end of 2024.

The rise in shipping costs increases the operational costs for sellers in the return and exchange process. Whether to subsidize consumers with free or low shipping fees to enhance the shopping experience and capture market share, or to raise prices to share operational costs and risks, is a dilemma for sellers. The latest news indicates that TikTok is accelerating the construction of logistics distribution centers in Germany, which may alleviate the shipping cost issues troubling sellers in the future.

In Conclusion

As TikTok Shop accelerates its expansion in the European market, backed by TikTok's large user base, cross-border sellers will welcome another billion-level traffic entry following the U.S. market. To seize this dividend period, sellers must combine localized content and precise marketing strategies to gain a first-mover advantage and achieve substantial growth in the European market.