Chain Store Age News Mentions First Insight | How Would a TikTok Ban Affect Retailers?
A new survey sheds light on how retailers and customers use TikTok, as well as on the impact of a potential U.S. ban.
The study from First Insight, "TikTok’s Uncertain Future," reveals that while 68% of surveyed retailers acknowledge that a TikTok ban could impact their business and conversion rates, only 28% have a contingency plan in place. Eight in 10 (81%) surveyed retailers use TikTok to sell directly to consumers, but nearly 70% have struggled with stockouts and delays due to viral content causing unpredictable demand spikes.
Meanwhile, surveyed consumers indicate that they expect TikTok to play a significant role in their holiday shopping. Almost three in four (73%) surveyed consumers plan to use TikTok as inspiration for their holiday shopping, and six in 10 (59%) intend to make purchases directly through the TikTok Shop e-commerce storefront.
Retailers, consumers will migrate to Facebook in event of ban
In April 2024, President Biden signed a law requiring TikTok’s Chinese owner ByteDance to divest its U.S. TikTok operation by the end of January 2025, or else U.S. app stores and Internet hosting services will not be allowed to support TikTok or any other ByteDance apps.
The law, which TikTok is currently appealing on constitutional grounds, was passed in response to longstanding concerns over possible ties between ByteDance and the Chinese Communist Party and possible risks to U.S. user privacy (ByteDance and TikTok have publicly denied the validity of these concerns).
More than eight in 10 (82%) surveyed retailers will increase their advertising spend on Facebook in the event that TikTok is banned, with both surveyed consumers and influencers believing that Facebook will be the dominant platform. Almost two in three (64%) surveyed influencers have already noticed shifts in consumer behavior, such as increased engagement on other platforms.
In addition, 40% of surveyed influencer and 39% of surveyed consumers named Facebook as the platform where they will spend the majority of their time if TikTok is banned. Instagram (which is owned by Facebook parent Meta) followed as top choice for 32% of consumers and 33% of influencers.
"Retailers risk losing a powerful product discovery platform if TikTok is shut down," said Greg Petro, CEO of First Insight. “With over two-thirds of consumers discovering products on TikTok that they later purchase elsewhere, the clock is ticking for retailers to develop contingency plans. Retailers need to understand where their shoppers will be if TikTok goes away, and which platforms can deliver the same product discovery and customer acquisition magic that TikTok presents."
First Insight’s findings are based upon a May 2024 retailer survey executed through InsightSuite, with 185 responses from U.S. retail decision-makers. Consumer and influencer data was collected from an August 2024 survey that focused on highly engaged users of the TikTok platform.
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