Tok-ing Trouble: How One Startup Is Navigating TikTok Shop

New sales channels don’t emerge often, but when TikTok Shop hit the scene two years ago, entrepreneurial CPG brands knew it was something worth paying attention to. However, as the platform has evolved, some growing pains have begun to pop up.

“It exceeded our expectations,” said Joey Rosa, co-founder and CEO of FamBam Foods, which has been selling its snack line Caulipuffs on the platform for the past four months. “I’m very happy that we’re on the platform, that we were thrown into the deep end and that we had to learn as quickly as we had to learn.

“Now, the platform itself has disappointed us in many ways, but I think they’re well aware of the shortcomings,” he continued. “It’s just like any other early company or platform trying to figure things out.”

At first, Caulipuffs was only receiving about five to 10 orders per day, until it went viral one night and Rosa woke up to over 1,000 orders from the platform. The brand, which self-fulfills its TikTok Shop orders from its 2,500 sq. ft. warehouse in Salinas, Calif., didn’t even have boxes on hand to meet that demand.

“I didn’t even know how to send that [volume of orders] to the post office because I didn’t expect that to happen so quickly,” Rosa said. “You can’t [say], ‘Okay, if that happens, I’ll deal with it.’ You really need to be prepared for it, because if you go viral and you sell out, and it’s going to take you months to get your product back in stock and you don’t have a plan – you’re squandering a gigantic opportunity.”

Caulipuffs managed through the mayhem and has maintained only its initial video fodder on its TikTok Shop account, but sales have continued to grow steadily. However, the process of selling on the platform has created a never-ending time crunch, Rosa said, explaining that when orders come in, the brand has only about 24 to 48 hours to make sure it has been packed, shipped and scanned. The entrepreneurial brand feels overlooked and under-supported by the tech giant.

“It’s stressful because you’re trying to do the best that you can, and then you can’t always meet these unrealistic expectations, especially as a small business,” Rosa said. “Even for the bigger businesses that are using [third-party logistics providers], and there’s other systems talking to each other – it’s almost impossible.”

That is an extreme amount of pressure on the small, family-run snack operation, Rosa said. The platform does build in a bit of breathing room for orders placed over weekends, but he noted there’s still “gray area” when it comes to certain holidays. If orders haven’t been scanned within that window, Caulipuffs risks TikTok slapping a bad rating on its storefront.

The challenges don’t end once orders are out the door either. Rosa said the brand has been losing hundreds of dollars in inventory per day due to customers claiming they did not receive the package; Rosa believes a majority of these claims are scams, as is extremely common in ecommerce, but either way, Caulipuffs bears full responsibility for making right on the lost or stolen goods.

TikTok does not assume any of the liability for lost orders, he said, unlike ecommerce giant Amazon, which takes only a portion of the reimbursement from the seller. He has been advised by TikTok Shop to dispute the claims so that the storefront remains in good standing, but said this then creates animosity with the end customer. TikTok often rejects his disputes, he said, so he has simply stopped submitting them.

Other CPG brands on the platform contacted by Nosh, including Refresh Gum, LikeAir and Lost & Found Energy, said they have not experienced these issues. A representative for TikTok Shop declined to comment.

Rosa agreed that while TikTok Shop bears similarities to Amazon’s early days, the latter ecommerce giant’s Fulfilled by Amazon (FBA) service makes selling on its platform seamless. In the case of Refresh, founder and CEO Ryan Stafford said the brand fulfills its TikTok Shop orders via the FBA integration, reducing the likelihood it will face the challenges Rosa has experienced.

But even with the lost inventory, Rosa claims the ROI of simply being on the platform is significant. The brand has aligned its retail growth strategy with its Shop efforts in certain regions to create a synergistic relationship between the platform and physical retail sales. Entrepreneurial CPG brands contacted by Nosh all emphasized the valuable dynamic TikTok Shop adds to their early growth strategies.

“It’s the people’s platform – for brands and influencers,” Rosa said. “It’s so hard for brands [to manage influencer networks]… What TikTok’s done is incredible.” They’ve managed to build an affiliate network on their platform that they manage so if a customer or a fan of the brand wants to advertise your product, they can, and they can get a commission off of the sale.”

Rosa explained that TikTok Shop’s built-in affiliate networks allow any “fan of the brand” to advertise the product and make a commission off of the sale. The entire program is managed by TikTok and commissions paid out by the ecommerce giant. He said Caulipuffs has thousands of affiliate partners on the platform, and while their posts are promotional, the relationship has a level of authenticity baked in.

“There’s a huge ROI, not just monetarily, but in regards to how you can build trust with your community and grow the brand, especially for an early-stage brand who’s willing to put in the time and the effort.”