TikTok Ban Threat Scares Off US Merchants

TikTok is reportedly having trouble attracting American merchants to its online shopping service.

A report Monday by The Information says U.S. merchants are both more interested in expanding their brick-and-mortar operations and concerned that the government could ban TikTok, and with it, the platform’s burgeoning TikTok Shop feature.

The Information notes that by contrast, overseas sellers are hopeful for a way to tap into what is the second biggest eCommerce space on the planet. However, TikTok has forbidden foreign merchants from accessing the American version of its shopping service.

This isn’t to say that U.S. merchants have shunned TikTok altogether. As noted here last month, many small and medium-sized businesses (SMBs) turn to social media platforms like it to reach potential customers.

“In fact, more than half of small businesses that have utilized TikTok report a significant improvement in their overall marketing performance, with 78% reporting a favorable return on investment (ROI) from their TikTok advertisements,” PYMNTS wrote. 

In addition, more than half of these brands saw a positive ROI within just six months of launching their TikTok advertising tactics.

This latest news comes on the heels of reports last week that ad spending on TikTok had grown by 11% despite the threat of government action by the U.S. and other countries. Among the top spenders on the platform were Amazon, Apple and DoorDash, the Financial Times reported.

“There’s unlikely to be an executive order resulting in an immediate ban that would impact advertisers,” Joshua Lowcock, chief media officer at ad agency UM Worldwide, told the FT. “Even with bipartisan support the legislative process will be protracted — giving marketers ample time to plan alternative strategies.”

TikTok, which is owned by China’s ByteDance, launched in 2017 and became the most downloaded app in America by the following year. It’s since become a cultural phenomenon, boasting 150 million monthly active users in the U.S alone.

That popularity has made it a key place for brands and retailers to showcase their products to younger consumers, which means a ban on the platform could cut off companies from a crucial spending demographic.

“Not only would brands and retailers lose their established a presence on the platform, as many companies have invested time and resources in creating TikTok content to reach a younger audience and drive engagement, they would lose a connection that TikTok has built a following on — authenticity,” PYMNTS wrote last month.