The news: TikTok Shop paused plans to end seller-fulfilled shipping in the US, per Modern Retail. The policy, which was scheduled to take full effect in late March, would have limited merchants to using TikTok’s own fulfillment services or a select group of approved partners—or risk being cut off from the platform’s 170 million US users.

Zoom in: TikTok cast the policy changes as a move to improve consistency and reliability for shoppers, but its attempt to tighten control over fulfillment—and take a bigger cut from sellers—was more likely to stifle growth than support it.

• TikTok Shop’s fulfillment services can be unreliable, resulting in inventory errors, shipping delays, and limited support when issues arise, sellers told Modern Retail.
• The requirements would have increased fulfillment costs and complexity, hurting margins and leaving less room to offer the discounts required to drive sales on the platform.
• Having to keep inventory in TikTok-operated warehouses makes it harder for brands to manage demand during viral peaks, increasing the possibility of missed sale opportunities.

The implications: While TikTok Shop is fast becoming an important sales channel for many brands, the backlash to its proposed fulfillment changes shows that sellers have no problems walking away if the math doesn’t work in their favor. The platform’s US ownership changes are also raising questions about short-term reliability, especially in the wake of an outage that disrupted service for both users and sellers.

We expect TikTok Shop’s US ecommerce business to grow 48% YoY to $23.41 billion this year—surpassing those of Target, Costco, Best Buy, and Kroger. But sustaining that momentum will require staying in merchants’ good graces, particularly as the marketplace looks to onboard larger brands and compete more directly with Amazon and Walmart.