On Sept. 12, ByteDance-owned TikTok officially launched TikTok Shop to enable users to find and purchase products featured in shoppable videos, advertising, livestream events and a marketplace that can be accessed through the Shop tab. The prospect of magnifying the sales impact of virality has brands flocking to TikTok Shop, but there are plenty of reasons to be cautious, including restrictions shutting out a wide swath of brands and the pervasiveness of counterfeits that may eat into the credibility of TikTok as a shopping destination, a problem Amazon could school the social media network on.

Writing in the publication Vox, A.W. Ohlheiser describes TikTok Shop as “a mix of Amazon and Wish or Temu; products from big, verified brands are sold alongside cheap apparel and household goods.” However, Leslie Ann Hall, founder and CEO of performance marketing agency Iced Media, argues that TikTok’s authority in fueling discovery gives it a leg up on Amazon for brands and stresses that TikTok Shop’s most sizable advantage is it closes the loop between the point of sale and potential new customers that often haven’t been previously exposed to the brands they see on TikTok.

Americans, about 150 million of whom are on TikTok, spend nearly 54 minutes per day on the platform, more than any other social media platform, according to market information resource Statista. Per market resource company eMarketer and Insider Intelligence, “Some 68% of Gen Zers are likely to make a purchase directly on the platform, putting it just behind Instagram (71%), in line with YouTube (68%), and ahead of Facebook (62%).” TikTok forecasts it could generate as much as $20 billion in merchandise sales via e-commerce this year. Over 200,000 brands are already selling on TikTok Shop.

Hall says, “This might be the most democratic retail opportunity for small brands in beauty that’s ever existed. The tiniest brand in the world that started yesterday—as long as they have proper business credentials, ingredients and proper disclosures on their products—can enter this marketplace with the same potential as the biggest multibillion-dollar brands in the world. It’s the best algorithm in the world for serving you content that it knows you’re going to respond to.”

TikTok is offering a host of incentives to entice shoppers and brands onto Shop. It’s subsidizing tiered product discounts for new and existing customers  as well as shipping costs up to $11. For example, TikTok Shop will subsidize Black Friday discounts up to 50%. Brands are paid the retail price on sales minus TikTok’s commission of 2% commission plus 30 cents for every transaction made on Shop.

Hall predicts the commission rate will fluctuate over time, and she’s unsure how long the subsidies will last, but they appear to be propelling beauty transactions. Consumer intelligence agency NIQ estimates 85% of the platform’s consumer product sales in September were in the health and beauty category. Food and home care accounted for 11% and 4% of sales, respectively.

Dollar sales for health and beauty products on the platform were up 26% from pre-launch sales in August. Facial skincare, fragrance, teeth whitening kits, lip cosmetics, body lotion, eye-related skincare, mouthwash, false eyelashes and mineral-based supplements like magnesium and iron were the top-selling products in beauty and health last month.

Skincare and tool brand Sacheu Beauty jumped on TikTok Shop after its lip liner tattoo product Lip Liner Stay-N went viral on the platform. Tobias Töpel, co-founder and CMO of parent company Gloss Ventures, says, “TikTok Shop allows you to accelerate customer acquisition and reduce cost per acquisition by making it way easier to collaborate with creators and above all making it possible to check out directly on the content.”

Töpel declined to comment on Sacheu Beauty’s TikTok Shop sales, but reports it has become one of the brand’s top priority channels next to Amazon and Ulta Beauty. Being on TikTok Shop has had a halo effect on the brand’s other retail outlets. Töpel mentions traffic has increased particularly to its Amazon storefront. He says, “We attribute this to the large increase in reach and views of both creator and brand content that TikTok Shop has allowed us to achieve.”

Since it started selling on TikTok Shop in early August, makeup brush brand BK Beauty has registered higher traffic to its website from new customers. Co-founder Paul Jauregui says the brand is one of the top 20 sellers in beauty on TikTok Shop. “In a very short time, TikTok Shop has become a material part of our business,” he says. “We are a low eight-figure brand and on any given day TikTok Shop accounts for 15% to 30% of our total sales. I can only see TikTok Shop getting bigger and bigger for our business.”

BK Beauty is pulling nearly all of TikTok Shop’s levers to fuel sales, including weekly live-selling events with giveaways, promotions exclusive to TikTok, paid ads, in-feed content with tagged products and third-party creator content via the platform’s new affiliate program. Jauregui says that the brand is garnering sales traction across the board. Sacheu Beauty experienced a greater sales bump on the platform after tapping into the affiliate program.

Hall says, “Creator-led content is driving all of the engagement on TikTok. If you’re not tapping into that part of it, you’re really missing out.”

Over 100,000 creators are participating in TikTok’s affiliate program. They’re supposed to have 5,000 followers to be eligible. The program rewards them for sharing and linking products in their videos and livestreams in exchange for commissions from brands. Creator commissions range drastically from 2% up to 80%.

BK Beauty pays around 15% to its creators, but Hall recommends that small brands with low brand awareness on the platform set their rates around 40% to 50% to attract as many creators as possible. To further encourage creators to get on board, TikTok Shop introduced a free sample program that allows creators to request free products from brands in exchange for videos.

So far, brands pouncing onto TikTok Shop are contending with technical glitches, policy violations and resellers peddling fake products. Jauregui refers to TikTok Shop as the most challenging channel that BK Beauty has ever set up and managed. He says, “We’ve experienced many glitches and disruptive issues across the platform, some due to our own learning curve and others due to technical bugs with the system.”

Upon signing on to TikTok Shop in the summer, BK Beauty noticed there wasn’t a clear path to sync product catalogs, manage orders or provide customer service. Fulfillment problems have persisted. Recently, hundreds of BK Beauty orders were left in limbo after TikTok Shop stopped syncing with the brand’s Shopify platform. Brands unable to quickly troubleshoot on the platform may run into huge problems.

“Once we got the order sync fixed, there wasn’t a clear way to process those orders or submit tracking information back to TikTok so they could validate we had shipped them,” says Jauregui. “Customers also didn’t get alerted that the orders had shipped because TikTok normally sends tracking info to them. There were several days of scrambling and some sleepless nights before we resolved the issue.”

Brands selling on TikTok Shop can sync their product catalogs through a direct Shopify connection that came out of beta about six weeks ago or via a third-party connector. Hall recommends that brands utilize the latter to ensure a smooth integration process. She characterizes the fees associated with third-party connectors as “nominal.”

TikTok Shop has strict requirements for early sellers. For instance, new sellers are limited to 200 orders a day. To sell beauty or personal care products on TikTok Shop, brands have to submit qualification documents to be approved by platform. The documents must have images of the product packaging and labels. Products that infringe on intellectual property rights are explicitly forbidden, but have proved tricky to police.

A copy of the drug facts label and proof of pre-market approval by the United States Food and Drug Administration or a copy of a relevant FDA monograph are required for products that claim to diagnose or treat diseases and ailments like sunscreens, anti-dandruff shampoos and antiperspirants. TikTok Shop has a long list of prohibited beauty, personal care and wellness products such as whitening skincare products, baby and maternity supplements, weight management supplements, adult sexual products and cosmetics marketed for medical purposes.

BK Beauty has received frequent violation notifications and suspensions in its first two months on TikTok Shop. Jauregui explains the issues stem from it not filling out product attribute details that didn’t specifically apply to the brand. He says, “We still get product violations today, but they seem to resolve on their own now. It was clear that the system was far more stringent with us early on before we established a healthy seller account track record.”

TikTok’s ad policies are shifting as the platform prioritizes Shop. It’s blocked brands from creating TikTok Shop ad campaigns that push traffic to the brands’ websites. TikTok Shop ads with tagged products must push traffic to a brand’s on-platform Shop. Julia Rubien, founder and president of social media marketing agency Amie Social, notes that the change has caused small beauty brands with tight budgets to pull back on experimenting with Shop until next year.

When TikTok left it open, the brands were dabbling, but the minute TikTok forced you to choose one, the brands were like, we’re driving to our website because it’s more reliable to us,” she says. “Different brands have different risk appetites for Shop, but I’m still telling all of our clients that they should absolutely set it up now.”

In addition, Rubien says beauty brands are concerned by the perception of TikTok Shop as third-party sellers peddle counterfeit beauty products on the platform’s marketplace. Sacheu Beauty has encountered a few fake listings for its products since being on TikTok Shop. Unlike on Amazon, Töpel says the accounts are easier to shut down on Shop. He says, “It’s not like on Amazon where fraudulent sellers undercut you on your own listings and steal the buy box.” Brands, content creators and startups are pouring into TikTok to assist users with separating authentic stuff from shams.

To combat the possibility of fake product listings, Hall recommends that brands take the extra steps to have their accounts verified on TikTok. While it’s generally a more involved process on TikTok than on platforms like Facebook or Instagram, Hall points out that scoring the blue check signaling verification isn’t prohibitive for smaller brands. She says, “If you have a verified profile associated with your Shop, that means that TikTok has done really extensive vetting to ensure that that brand is the manufacturer of that particular product.”

Hall emphasizes that brands shouldn’t perceive TikTok Shop as being an automatic cash cow. A brand must have proper merchandising for the platform and populate its feed with compelling content on a consistent basis. “Every single brand I work with is starved to keep up with the pace and scale that TikTok requires from a net new content perspective,” says Hall, whose agency is starting an end-to-end service to help emerging brands onboard on TikTok Shop and strategize for it. “If you post a duplicate video on TikTok, you’ll absolutely be deprioritized by the algorithm.”