Whispers of a TikTok ban have grown louder in recent months, and even after the social platform’s CEO Shou Zi Chew gave his testimony last week to address concerns surrounding data privacy, it’s likely Congress will take some action, according to Rep. Mike Gallagher.
Whether a ban, pullback, or imposed restrictions, changes to TikTok’s availability could spell trouble for brands who are relying on social commerce more than ever. Several major brands have a significant presence on the platform, leveraging its capabilities for e-commerce expansions, interactive tech like augmented reality, and digital marketing to expand visibility.
The Power of TikTok and Social Commerce
TikTok has a strong hold on U.S. audiences, with 150 million monthly active users — up from 100 million it said it reported in 2020. So what might a TikTok pullback in the U.S. mean for the consumer goods and retail industries? Product discovery could take the biggest hit according to research.
According to a TikTok CPG Insights survey conducted last year, 79% of millennials and 75% of Gen-Zers discover new CPG products more often after joining TikTok, and 3 in 4 make the majority of their household purchase decisions right on the platform. Of all CPG products being marketed on TikTok, the top three categories are Food & Beverage (91%), Personal Care (80%), and Household Care (73%).
Word of mouth marketing is a powerful tool in the world of CPG and retail, and according to a survey conducted by Material for the platform, over half of users (57%) research details about where to buy products they've seen on TikTok — 84% above traditional social platforms.
Social commerce itself, regardless of platform, holds enormous opportunities for growth. According to McKinsey & Company, the global social commerce market is expected to grow to more than $2 trillion by 2025. It is also anticipated that it will make up 5% of total U.S. e-commerce by 2025.
Of course, like any form of influencer marketing, there are risks for brands. In fact, while the popular #TikTokMadeMeBuyIt hashtag currently has 47.7 billion views, a contrasting trend has recently cropped up. Being called “de-influencing,” consumers on the app are telling their followers which products they should avoid, either due to cost or performance. The #deinfluencing hashtag has accrued 425 million views so far.