Sales Structure of TikTok Shop
TikTok Shop consists of four key components:
• Sellers
Sellers can be individuals, small shops, or large businesses. The most important requirement is clear product preparation. Sellers are responsible for uploading products, setting prices, managing inventory, and handling orders.

• Content Creators
Creators serve as the communication and amplification channel for products. They produce creative videos, follow trends, and run livestreams to introduce items, which increases reach and drives conversions.

• TikTok
TikTok manages distribution and oversees system operation. It determines which videos and livestreams reach the most relevant audience, based on user interaction and viewing behavior. TikTok also manages purchase flow and revenue reconciliation, making the buying process smoother for all users.

• Logistics Partners
TikTok connects with shipping partners to ensure fast and safe delivery. It also handles payment processing so that sellers receive their revenue accurately. As a result, both buyers and sellers can complete transactions conveniently within TikTok.

Sales Process
The overall system operates through five main steps:
• Sellers prepare a complete shop profile, optimize their page, upload products with pricing, and ensure inventory availability.
• Creators or sellers create videos or livestreams with product links, designed for the right audience and flexible commission rates.
• TikTok distributes the content to the most relevant users based on the algorithm and optimizes visibility to drive purchases.
• Customers place orders directly inside the app without leaving TikTok.
• Orders are processed and delivered by logistics partners, and TikTok finalizes payment to sellers, completing the cycle.

TikTok Shop Algorithm
TikTok Shop’s algorithm is built to maximize both viewing experience and purchase behavior. When a product-linked video is uploaded, it is not pushed widely at first. Instead, TikTok begins by showing it to a small group of users to evaluate interest and commercial potential.

• Initial Distribution
The video is delivered to a small testing group with similar viewing behavior. TikTok evaluates several signals:
– Percentage of users who stop scrolling and watch the first seconds
– Percentage who watch until the middle or end
– Click-through rate on the product link
– Add-to-cart rate
– Number of orders generated
✦ Only one or two strong signals are enough for TikTok to consider the video promising.

• Expanded Distribution
If early engagement is positive, TikTok expands the video to larger audience groups:
– Round 1: Small group
– Round 2: Larger group
– Round 3: Very large group
✦ A video can scale quickly and generate revenue through each expansion round. When user interest drops, distribution slows down.

• Limited Distribution
If users skip the video quickly, watch time is low, or there are no product interactions, the algorithm interprets the content as:
– Not engaging
– Not relevant to the audience
– Lacking commercial value
✦ Video will receive limited reach, as TikTok prioritizes content that retains viewers and delivers strong engagement and buying signals.

TikTok Shop is a fast-growing, high-potential sales channel powered by social commerce. Content and shopping are merged into a single experience that naturally attracts users.

To take advantage of this platform, understanding how the system operates and how the algorithm evaluates content is essential. Videos that meet these criteria have a much higher chance of being recommended and going viral.

As more videos perform well, businesses can reach a broader audience and significantly increase their conversion rates.