AmpliSell
A weekly breakdown for ecommerce leaders scaling TikTok Shop. The creator systems, benchmarks, and data driving GMV for top brands and client accounts - ready for you to replicate and use. Every Tuesday.
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Hey Reader, It's Josh from AmpliSell. I’m in conversations with 3 senior ecomm leaders right now who are all working on explaining TikTok to leadership and trying to get buy-in and budget for this channel. TikTok is expensive to pitch wrong. If expectations are out of line you and I both get roasted in 3 months because ROI isn't there yet. Leadership always wants three things: how does the channel work, what does it cost, what is the payoff. So this week I’m helping you crack that nut. Here’s what you need to know to understand TikTok better than 99% of people and ELI5 to leadership. BONUS: TL;DR at the end which you'll be able to copy/paste internally. How does the channel work?Creators and affiliates make videos of your products. Other people view those videos, and they may or may not buy. When they do buy, oftentimes they’re buying off TikTok because they love the Prime shipping from Amazon, or you have a color on your website that’s only on your website, or they saw you on the shelf at Walmart and remembered the video. The more creators you have working for you, the more videos you get, the more views you get, the more sales you get on and off platform. TikTok runs on volume: Ridge had close to 1,000 creators post about 7,000 videos in a single month. My buddy Paul at BK Beauty told me he's running 1,000 samples per month for about 2,000 videos. Explain it as: Videos -> Views -> GMV. You get more sales by pulling 4 levers:
This flywheel is at the heart of what the largest brands on TikTok Shop have built: Tarte, Medicube, Comfrt, FrostBuddy, and more. Simple to describe. Expensive to run. Which brings us to the question you love to get. What does it cost?Three line items. 1. Samples. This is your COGS plus shipping. You need to budget for 300 to 1,000 samples a month depending on the size of your brand. Most of you reading this have established brands with good traction, so budget at least 300 samples per month of your hero product at minimum. That’s your investment in getting creators to work with you. 2. Incentives. You’re going to give creators commissions, and on top of that, bonus incentives when they reach certain GMV levels. That could be anywhere from $5,000 a month to $50,000 a month depending on scale. To give you a fun example: at the last creator conference I was at, Medicube was giving a Land Rover to their top 10 creators for the quarter. Start way smaller than a Land Rover of course (or maybe not :)) and budget for it to grow. 3. Ads. This means GMV Max, TikTok’s automated ad product for Shop. TikTok’s minimum is $1,500/month. Most of you need to be spending at least $5,000 a month once you turn it on. One key component here: don’t turn on GMV Max until you hit at least 100 creatives. That gives the algorithm a good pool of videos to pull from. We've made this mistake AND Clint at TikTok shared the data behind it during my last meet with him - GMV Max ROI sees a step change at over 100 videos. Turn it on before that and you’re going to get so-so results. The way you get the most return from all three is by building a creator community. Pull in the creators that are actually performing, get them into a dedicated group, and incentivize and train them to post more. Your lever to improve ROI from these investments is simple: What is the payoff?Demand generation that converts on ALL channels. The catch is timing. In the beginning your on channel ROI will be low, like 1.0. I’m talking at least 6 months before that changes. Here's what I say: “Expect a 1x return or less for the first six months. That’s the build phase: recruiting creators, seeding samples, and stacking creatives. Over the long run the community drives ROI up through more and better videos and more and better GMV Max ads.” Set reasonable expectations up front so nobody is breathing down your neck in month 2 asking why the channel isn’t profitable yet. We’ve all been through that meeting. You may get this push back: “Tarte does nine figures on TikTok. Why would ours take so long?” Two honest answers. They started early. When those brands started on TikTok, there were very few brands and a ton of creators. They scooped up some of the best creators out there and spent the last two years training them and helping them get better at selling on TikTok. Right now that equation is flipped completely. There are 220,000 brands on TikTok and 8,000 L3+ creators (creators with over $25k GMV). Getting good creators to work with you is now the key lever and the hardest one to pull. You need compelling incentives, proof that your product sells, and more. Traction takes at-bats. I compare it to baseball. You take a lot of swings (videos) and you’re going to have a lot of strikeouts and misses. You will hit some singles. But every now and then you get a home run that really pays off. On TikTok you want to take as many at-bats as you can and that means getting a lot of creators pumping out videos for you. PS - This reminds me of The Office episode where Jan comes to explain sports analogies to the women and Kelly says something like "oh like when you went to second base with Michael". lol. That show is my comfort food. While the flywheel builds, track the number that predict revenues: new videos per month per proven creator. That is your proof of progress hose are your proof of progress and your leading indicator of GMV. The ELI5 for leadershipOr anyone that needs to get caught up on TikTok on your team. “We pay creators to post videos about our products. People watch and buy, mostly on Amazon and our site, so TikTok’s own numbers will always look weak on paper. It costs three things: free product, creator bonuses, and ads. For the first six months the return will look be 1x or less while we build the creator base. Then it compounds, because every month stacks more creators, more videos, and more proof of what sells.
The brands doing $100M bought their creator communities early and cheap. Ours will cost more and take longer. Fund the build phase and judge us on the omnichannel number.”
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AmpliSell
A weekly breakdown for ecommerce leaders scaling TikTok Shop. The creator systems, benchmarks, and data driving GMV for top brands and client accounts - ready for you to replicate and use. Every Tuesday.