TikTok Shop's April Commission Fee Hike Pressures Vietnam Sellers

Starting April 1, TikTok Shop will increase its commission fees from the current 2-3% to 3-4% for standard stores, marking an average rise of about 1%. Meanwhile, official flagship stores (Shop Mall) will see their commission rates climb from 4.54-5.78% to 5.78-7.7%, averaging a 2% increase.

Detailed Adjustments:

1. For standard stores, commission rates will increase as follows:

• Home Appliances: 2% → 3%
• Fashion, Mother & Baby, Home & Living: 3% → 4%
• Health & Beauty: Remains unchanged at 4%

2. For Shop Mall stores, rates will rise as follows:

• Home Appliances, Fashion, Home & Living: 4.54% → 6.05%
• Mother & Baby, Health & Beauty: 5.78% → 7.7%

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At the same time, Shopee is set to raise its fixed platform fee for standard stores from 4% to a maximum of 10%. Most product categories will see their fees increase from the current 3-4% to 7-9%. Additionally, Shopee is discontinuing certain free support services and will start charging a fixed return shipping fee.

Estimates suggest that Shopee’s overall costs could rise to 6.5-15% after adjustments. If sellers factor in additional expenses such as Voucher Xtra (3%), Content Xtra (3%), and payment processing fees (5%), they will need to maintain a 30-40% gross margin to remain profitable. For sellers with high operational costs, profit margins may need to exceed 50%. This poses a significant challenge for small-scale sellers whose profit margins typically range between 20-25%, making it difficult for them to compete.

E-commerce Market Shift: Increased Pressure on Small Sellers

Compared to Shopee and TikTok Shop, Lazada offers a lower commission structure, with standard store platform fees ranging from 0.99-3.99% and additional transaction and processing fees of 4.99% and 5%, respectively. However, given that Shopee and TikTok Shop dominate the Vietnamese market with a 66.7% and 26.9% share of total transactions, while Lazada and Tiki hold a combined 6.4% market share, sellers remain heavily reliant on these two major platforms to reach consumers.

According to e-commerce data firm Metric, by the end of 2024:

• Shopee standard stores numbered approximately 276,000, while
• TikTok Shop stores totaled 204,000.

Despite the continued expansion of Vietnam’s e-commerce market, the number of small sellers has been declining. Shopee’s official flagship stores increased from 14,000 to 16,000, but standard stores dropped by 88,000. TikTok Shop also saw a decline, from 219,700 to 204,000 stores, highlighting the intensifying market competition.

Why Are Fees Increasing?

Industry experts speculate that the recent fee hikes by Shopee and TikTok Shop are linked to their dominant market positions. Over the past year, TikTok Shop has gradually reduced its promotional incentives, while Shopee’s higher fees may be part of a strategy to filter out smaller sellers and shift toward a more brand-focused, large-scale marketplace.

Additionally, the fee adjustments may be influenced by Vietnam's upcoming tax withholding regulations, which require platforms to collect and remit taxes on behalf of sellers, increasing their operational costs.

Future Outlook: Small Sellers Face Tough Choices

These rising costs will further squeeze small businesses, pushing the market toward larger brands and official flagship stores. With increased cost pressures, many small sellers will have no choice but to raise their prices, losing their competitive pricing advantage.

Industry insiders suggest that e-commerce platforms may continue prioritizing live streaming, brand marketing, and digital transformation, making it increasingly difficult for small sellers to survive without adapting. To stay competitive, they must either pivot their business models or exit the market altogether.