- TikTok may soon be blacked out in the US due to a sell-off or ban law.
- Merchants who rely on its e-commerce tool, Shop, are scrambling to draw up contingency plans.
- Some are stopping warehouse shipments and testing other apps like Flip and Instagram Live.
The clock is ticking on a possible TikTok ban in the US, and panic is setting in for the platform’s sellers and their e-commerce partners.
TikTok Shop, the in-app purchase product, has flourished in the US. Last year, merchants pulled in millions of sales per month on the platform, including $100 million on Black Friday alone.
But all this can go away in a few days. Without court or presidential intervention, TikTok said it would “go dark” after Jan. 19 to comply with a sell-or-ban law. The company has asked the Supreme Court to extend that deadline. Legal analysts say the odds are not in TikTok’s favor.
Some e-commerce players are already pulling out of the app.
An executive at TikTok Shop’s agency partner told Business Insider that many merchants have put their TikTok Shop plans on hold while they wait to see what happens at the Supreme Court. Some have stopped sending free samples to TikTok creators, while others are preventing products from being shipped to US warehouses amid uncertainty. The executive requested anonymity to protect business relationships. Some marketers are even looking to dig into contracts with the firm to account for the possibility that TikTok could go dark, the executive said.
Two agency sources told BI that the TikTok Store team has not communicated anything to them about a possible shutdown of the app in the US, acting as if it is business as usual.
A TikTok spokesperson had no comment by the time of publication.
Other retailers are testing alternative social commerce platforms, such as Flip, Instagram Live, Amazon Live and YouTube Shopping. And some US merchants are exploring selling goods in other countries where the TikTok Store operates.
Jake Bjorseth, founder of the TikTok store’s partner agency Trndsttrs, described the storm of planning to ban TikTok as “preparation for the end of the world”.
“Thankfully, we’ve decided a lot of this in advance, but it’s still unclear where the brands and creators supported on TikTok will flow,” Bjorseth said. “It’s definitely going to be a tumultuous few months for the people who rely on it.”
Nicole Rechtszaid, co-CEO of e-commerce agency Ghost Agency, said the company has similarly halted new business operations related to the TikTok Store and general production of TikTok content in preparation for a possible TikTok shutdown. The company’s revenue is heavily tied to the app, and if TikTok leaves the U.S., Ghost may need to consider alternative paths such as merging with another company, she said.
“For our existing customers, we have intended to move them to alternative platforms, such as Instagram Live,” Rechtszaid said. “However, it’s challenging to replicate TikTok Shop’s success on platforms that lack the combination of an engaging algorithm and native shopping features.”
While some Store businesses are deep in contingency planning, others are hoping to get what they can out of the platform while it’s still around.
“We’re carrying on as usual until we’re told to stop,” Lindzi Shanks, co-founder of gourmet marshmallow retailer XO Marshmallow, told BI. “We also never put our eggs in one basket, so to speak. We have always diversified our social platforms and marketing efforts and continue to do so.”
“It will set the industry back a few years”
Although merchants and sellers hedge their bets by testing alternative platforms, replacing the TikTok Shop in the US will be difficult.
Other apps excel in some aspects of social commerce. For example, direct shopping app Whatnot said it brought in over $3 billion in sales last year. But only TikTok offers a comprehensive place for sellers to run their social commerce businesses, including a dedicated app store, affiliate marketing technology and order fulfillment services.
“If it is banned, it will be very bad for direct shopping,” said the first executive of the agency TikTok Shop. “It’s going to set the industry back a few years.”
Michael Herling, a Shopkeeper who sells hats on TikTok under the Herling Handcrafted brand, said most of his business comes from TikTok sales and referrals. If TikTok ends up being banned, he is planning to use Instagram and Facebook to advertise his business.
“It’s a real disaster. I built my business on TikTok,” Herling said. “I’ve been very down about it, knowing that if it’s stopped, it basically shuts down my business.”
