The semi-closed loop model has emerged as a popular choice for businesses looking to expand on TikTok. However, the recent rise of the "central store" concept has created confusion among merchants. Understanding the differences between these two models is crucial for making informed business decisions.
1. Store Ownership: Who Holds Control?
In the standard semi-closed loop model, merchants maintain full ownership of their Shopify stores. This allows complete control over store design, operations, and data management. The central store model differs significantly, as the Shopify store technically belongs to TikTok's operation center, with merchants granted only sub-account access. This distinction resembles the difference between renting and owning property—both provide accommodation but offer vastly different levels of autonomy.
2. Product Categories: Understanding the Limitations
The standard semi-closed loop model restricts merchants to selling products within their approved category, potentially limiting opportunities to capitalize on trending items. The central store model removes most of these restrictions, permitting sales across various categories except for special classifications like crystals, jewelry, and gold. While this offers greater flexibility and experimentation potential, it also increases operational complexity, requiring careful assessment of business capabilities.
3. Payment Processing: Cash Flow Considerations
Under the semi-closed loop system, merchants receive payments directly through their chosen channels, enabling more flexible cash flow management. The central store model introduces an intermediary step, with TikTok's operation center initially collecting payments before transferring funds to merchants after order completion. This processing period may impact cash flow efficiency, a critical factor for businesses prioritizing liquidity.
The semi-closed loop model offers greater autonomy and financial flexibility but comes with category limitations. The central store alternative provides broader product options but involves constraints regarding store ownership and payment processing. Choosing between these models requires careful evaluation of business characteristics, financial capacity, and risk tolerance. Businesses prioritizing complete control with specialized category expertise may prefer the semi-closed loop approach, while those seeking diversified product opportunities and willing to accommodate payment processing delays might consider the central store model.