The expected shutdown of TikTok this Sunday represents the biggest threat to a universe of small and medium-sized businesses, as well as influencers who depend on the short video platform for their livelihood, while big brands are expected to migrate elsewhere.
TikTok says its U.S. site generates billions of dollars for businesses that sell candy, beauty products, clothing and other consumer goods.
However, that economy is now under threat. The Supreme Court of the United States unanimously confirmed this Friday the law that bans TikTok in the country for reasons of national security, which will lead to a blackout of the platform this weekend.
Following the ruling, President-elect Donald Trump said he would make a decision on TikTok, without offering details.
As a marketing tool for companies, TikTok, owned by China’s ByteDance, generates income for itself and many of its users and merchants, through sponsorships and the collection of sales commissions.
Many TikTok users are paid to be brand ambassadors, selling merchandise and through affiliate partnerships where companies pay them commissions when the public purchases products linked on their social profiles. TikTok also compensates creators for making videos.
Those receiving income from TikTok include startups, consumer companies and bloggers who take advantage of the platform’s enormous reach, which reaches 170 million Americans.
Read: Trump says he will make a decision on TikTok’s future ‘in the not-too-distant future’
For example, small and medium-sized businesses in the food and beverage sector, which saw their revenue increase by $4.1 billion in 2023 thanks to in-app marketing and advertising, would be the most affected, according to estimates by the economic consulting firm Oxford Economics. . These data were commissioned by TikTok.
TikTok CEO Shou Zi Chew said in a video posted on the app this Friday that seven million American businesses make a living on the platform.
For Mama V’s Candy, the e-commerce arm of ByteDance’s video platform TikTok Shop changed the trajectory of the business, said owner Valerie Verzwyvelt.
“We’ve been practically viral since launching TikTok Shop last year,” Verzwyvelt said.
The company, which sells extremely sour candies, generated $6 million in 2024 and has sold nearly 300,000 units on the app, he noted.
“We’re on our second expansion,” he said, a decision the Pineville, Louisiana-based company made before facing the reality of the Jan. 19 deadline. “Now I have to rebuild my business.”
Sven Greany, co-owner of California-based independent beauty brand Simply Mandys, said a ban on TikTok would stop his business “suddenly” after a record-breaking holiday season.
Simply Mandys generated more than $20 million in sales in 2024 on TikTok Shop with the help of livestreams, and Greany said she never worried about the app’s ties to China. 95% of the company’s total sales come from buyers on the platform, he said.
However, the company plans to move its marketing to Instagram once TikTok is no longer available.
Read: TikTok’s fight against ban gets support from key US lawmakers
But TikTok’s privacy policy prevents sellers from accessing buyers’ emails, addresses and other information that could be useful for off-platform marketing. Essentially, if TikTok goes away, so do Simply Mandys’ customers, Greany said.
They liquidate inventories
Other businesses are holding sales and cutting prices to clear inventory in case traffic to their stores ends abruptly on Sunday.
However, that doesn’t stop some influencers from recommending products as they look to turn a profit before the ban.
“These TikTok stores are selling out on their products in the face of the ban, so I’m linking to some discounted skincare products I love,” one user told her 65,000 followers.
Beyond commissions, a TikTok influencer with between 10,000 and 100,000 followers can potentially earn $2,000 per brand campaign, according to Lithuania-based influencer marketing agency Billo.
For some of the top TikTok creators in the United States, their entire income will stop, while the large companies they collaborate with will jump to other platforms, such as YouTube or Meta’s Instagram.
Oxford Economics noted that small and medium-sized business activity on TikTok contributed $24.2 billion, a small portion of the total US GDP in 2023, while supporting 224,000 jobs. Reuters could not independently verify those estimates.
Yuriy Boykiv, CEO of e-commerce consultancy Front Row, said his clients made contingency plans to shift their marketing spend to other platforms with similar short videos, including Instagram and YouTube.
Read: More than 11 billion dollars in advertising investment at stake due to the ban on TikTok in the US
“Every client has known about the possibility of TikTok disappearing since April 2024 (when the law was enacted in the US), so everyone has done some type of preparation,” Boykiv said.
Front Row’s clients include Procter & Gamble’s hair care brand Ouai and LVMH’s Sephora, according to its website.
“We’ll go where our community is, and right now, that includes TikTok. If they move to other platforms in the future, we will be there with them,” Kory Marchisotto, chief marketing officer at elf Beauty, said in a statement to Reuters.
Mitchell Halliday, founder and creative director of British beauty brand Made By Mitchell, which launched on TikTok Shop US in late August, began selling on TikTok Shop in the UK in 2022, becoming the first British brand to beauty to reach 1 million dollars in sales in a single day on the platform.
“TikTok is the center of beauty today. It used to be YouTube, then Instagram, and now it’s TikTok,” Halliday said.
With information from Reuters
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