Recent efforts to regulate TikTok in the US have led some retailers to reconsider their investment in the video-centered social media platform, with some businesses already redirecting their budgets to alternative platforms, such as YouTube and Pinterest. Last month, the House of Representatives passed a bill that, if it becomes law, would lead to a nationwide ban of TikTok if the owner doesn’t sell its stake. The bill reflects the concerns of some that TikTok, a wholly-owned subsi
subsidiary of Chinese technology firm ByteDance, poses a national security threat. A claim that TikTok and the Chinese foreign ministry have criticized.
The bill has also faced pushback from content creators and small businesses that derive significant or total portions of their income from the platform.
While the bill’s future remains uncertain, it could have significant implications for retail, which has largely benefited from TikTok’s ability to make trends and products go viral.
In addition to providing ample marketing opportunities for retailers, as evidenced by the #TikTokMadeMeBuyIt hashtag, TikTok has tightened its hold on the retail industry with its in-app sales platform.
TikTok Shop launched last September and allows brands and creators to showcase and sell products directly on TikTok, through a suite of in-app shopping touchpoints. This has proven to be highly successful for TikTok and retail brands alike.
Based on sales figures collected by New York-based market research and analytics firm YipItData, TikTok Shop is already approaching a projected annual revenue of around $4 billion. TikTok allegedly has goals of pulling in as much as $17.5 billion in US gross merchandise value in 2024.
Dave Bruno, director of retail industry insights, Aptos, a retail technology company, told Inside Retail that the effects of a potential ban would be felt throughout retail, but that the biggest impact would be felt by marketing departments charged with reaching and influencing Gen Z, and soon Gen Alpha.
“Despite the popularity and influence of TikTok, it’s probably long past time to begin exploring new avenues for reaching younger consumers, he said.
“It’s never a great idea to have a brand strategy subject to the whims of social media.”
Ultimately, Bruno believes retailers will hedge their bets and continue investing in TikTok while simultaneously exploring other platforms.
“I don’t expect they [retailers] will abandon TikTok whatsoever, including TikTok Shop, unless they are forced to do so because of a ban. And I do suspect they will evaluate other alternative platforms, including the obvious options of Snap and to a lesser degree Instagram,” he said.
“As far as new [and] emerging platforms, there is some talk of a ban driving opportunities to Triller, but I have not seen nor heard enough to say with any confidence where they will turn.”
Brands react to the potential TikTok ban
However, the uncertainty surrounding TikTok’s future in the US is already forcing retailers to reconsider how much they invest in marketing and selling on TikTok versus other platforms.
Some companies, such as Papier, are moving forward with marketing products on TikTok but remain focused on alternatives.
“If the TikTok ban proceeds, undoubtedly, it would be disruptive, yet it presents a distinct opportunity for brands and creators to venture into alternative platforms,” Holly Chapman, Papier’s head of brand, stated.
“With Instagram’s Reels and YouTube’s Shorts gaining momentum, businesses can swiftly pivot to leverage these emerging formats, broadening their digital strategies. Meanwhile, our focus remains on creating in-house TikTok native content and collaborating with influencers on TikTok, complemented by our presence on Instagram, where the majority of our content and customer engagement lives.”
Meanwhile, companies like online fragrance retailer Twisted Lily have decided to take a more cautious approach towards interacting on the video-viral platform.
“We see the potential TikTok ban as a significant disruption to the thriving landscape we at Twisted Lily embraced,” Olya Bar, Twisted Lily’s head of digital strategy and communications, commented.
“Creators, small businesses like ours, and major brands have all invested in TikTok’s short-form videos and TikTok Shop. We were in the midst of onboarding items onto TikTok Shop, but all efforts are now on hold pending the final decision.”
Similar to Papier, Twisted Lily will be focusing its marketing efforts on platforms outside of TikTok.
“We are redirecting our attention towards alternative platforms such as Pinterest and YouTube,” Bar said. “Pinterest presents an excellent avenue for both commerce and content generation, facilitating valuable collaboration with influencers. Regarding YouTube and its shorts feature, we perceive it as an optimal platform for concentrating efforts on affiliate networks, fostering organic content creation, and capitalizing on advertising opportunities.”
However, other brand founders, such as Nikita Charuza of the hair and headcare brand Squigs Beauty, are marching forward with their TikTok marketing and sales strategies.
“The potential TikTok ban has not affected Squigs’ approach to social media content creation,” Charuza explained.
“We recently joined TikTok Shop and we have no plans of shutting down until something more concrete occurs with the ban in the future. We haven’t been reprioritizing efforts of content creation or opting for alternative social media platforms. We’ve been business as usual and continuing to post daily on both our TikTok and Instagram accounts.
“As a small business and a personal avid user, banning TikTok would be a tremendous loss because it’s been a wonderful way to showcase the behind-the-scenes of building a growing brand while connecting with millions of people around the globe.
“We’ve had multiple videos go viral on TikTok, which as a small business is so exciting to get Squigs in front of the eyes of so many people in such an organic way! Regardless of what happens, we will continue to showcase Squigs’ mission of ‘Happy Headcare’ and making Ayurveda [a traditional Hindu system of medicine] feel fun and approachable.”