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Why TikTok is important for the e-commerce eco system, and banning it hurts Manufacturer

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It is election year, so here we go again: Everyone is debating if it should be banned or needs to be sold. Regardless on which side you are on, you are most likely will have a (strong) opinion on either scenario. Let’s put political arguments aside, and just look at three simple facts:

TikTok has over 1.5 billion active monthly users

In comparison, Facebook has about 3 billion, YouTube has 2.49, WhatsApp has 2 billion, and Instagram has 2 billion as well. Those four SocialMedia platforms are owned by 2 companies: Meta and Google. with TikTok being the 5th biggest, it is a nice breath of fresh air and competition in the social media space. If you remove or ban TikTok in the US, Meta and Alphabet (Google) would benefit. Competition means, that Manufacturer when trying to advertise their products to consumers, they gain some independence and (maybe for now) cheap(er) CPC for online advertising.

TikTok is the Go-To App for Gen Zers

Every generation has their own Social Media platform. While Millennials sort of “gave” FaceBook to the Boomer generation, mostly still reside on Instagram. For Gen Z, TikTok is the most popular app, they use it more often than Instagram. Which gives Manufacturer a unique opportunity to target that generation in particular, which are otherwise hard to reach via Instagram/Facebook/Youtube/Google.

30% of daily TikTok users have used TikTok Shop

Of TikTok’s daily users, 30% have used TikTok Shop and 33% haven’t used it yet but are interested. Of TikTok’s weekly users, 29% have used TikTok Shop and 26% are interested. This presents an opportunity for manufacturer seeking to expand social commerce strategies onto TikTok. There’s an audience willing to shop in-app currently or potentially. Taking it away, removes again, another channel, and sends them back to the big two: Meta and Alphabet.

Why TikTok matters for Manufacturer

The years prior to the pandemic, everyone debated around who is going to be the new Social Media challenger for Facebook/Instagram and YouTube. Snapchat tried, but never reached the mass market. Now we have TikTok. The only problem is that TikTok is not owned by a US company, but instead by a Chinese company called Bytedance. Ever since the tariffs war and sanctions between the US and Chine, it has become increasingly more difficult for TikTok here in the US. Given the fact that 1/3 of TikTok’s users are located in the US, the United States is TikTok’s second most important market in the world.

The ability to attract so many users, and keeping them entertained for a long period of time allows for features like TikTok stores. Which is basically an online store, hosted on TikTok that allows Manufacturers to sell their products directly on TikTok to their users. The potential is huge: It allows Manufacturer to market themselves (or through influencers) in a different way that traditionally possible. With a new way of marketing yourself, come new opportunity. It also brings new wind into the whole industry, and offers a new avenue for growth. The most important argument is nonetheless: it will make Manufacturer less depended on Meta and Alphabet. With CPC prices constantly increasing, it brings competition. Competition is something we should cherish in the United States. It is fair to ask where data is hosted and if it flows offshore. It is also fair of wanting to regulate that. However, going the easy route and just banning TikTok? It would be a reset to whole of e-commerce and Manufacturer would be at a loss meanwhile, Meta and Alphabet would be winning. Again.

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