According to a new report from First Insight, more retailers and brands need to get cracking on a back-up plan if TikTok gets banned. The report, titled “TikTok’s Uncertain Future,” showed that just 28 percent of polled retailers have a contingency plan. And 68 percent of retailers surveyed acknowledge that a TikTok ban could impact business and conversion rates.
Earlier this year, President Joe Biden signed into law a bill that would require TikTok’s Chinese owner, ByteDance, to sell the social platform or face a ban of the app. In the U.S., there are more than 120 million active users on the app, which has become popular with fashion apparel retailers and brands to engage consumers.
Greg Petro, chief executive officer of First Insight, said retailers and brands “risk losing a powerful product discovery platform if TikTok is shut down. 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.”
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Petro said 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.”
The First Insight report showed that 82 percent of retailers said they will increase their advertising spend on Facebook “in the event that TikTok is banned, with both consumers and influencers believing that Facebook will be the dominant platform,” the report’s authors said, adding that 64 percent of influencers polled said “they have already noticed shifts in consumer behavior, such as increased engagement on other platforms, signaling that consumers may be preparing for life beyond TikTok sooner than retailers realize.”
Other findings from the report show that 73 percent of consumer respondents use TikTok to get inspiration for holiday gifting. And 59 percent of shoppers polled, said they’re buying items directly through the app. Of the retailers polled, 81 percent said they’re using TikTok to sell directly to consumers, “but nearly 70 percent have struggled with stockouts and delays due to viral content.” The report noted that the “unpredictability of ‘TikTok made me buy it’ moments highlight the challenges retailers face in managing inventory and planning for demand spikes.”
First Insight said in a statement that the findings “suggest that retailers need to be more proactive in monitoring where their customers are shifting their attention and preferences. Relying solely on historical trends or assumptions can lead to missed opportunities and costly mistakes.”
The company said by integrating its voice-of-customer data into their planning, “retailers can make better decisions on which influencers to partner with, how to optimize their pricing strategies, and where to focus their marketing spend — ensuring they stay ahead of trends and continue to resonate with their target audiences.”
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