TikTok’s Rapidly Growing Influence on Ecommerce

While the majority of consumers (56%) still prefer to start their search for products on Amazon, nearly 20% began with TikTok in the first quarter of 2023, up 44% compared to prior annual data. The platform’s influence among the youngest of U.S. shoppers is even higher: 40% of Gen Z consumers actually prefer it for search instead of Google.

How a TikTok ban could disrupt ecommerce and hurt Amazon businesses

After the U.S. Congress sharpened its aim at TikTok in March, questions about the federal government’s intent and ability to ban the popular social media platform continue to swirl. 

Concerns about such a move have primarily centered around freedom of speech and national security, but little has been said about the broader economic impact related to this proposed ban. For small businesses — and those that sell on Amazon in particular — the disappearance of TikTok would have a unique and immediate financial impact. 

With more than 150 million monthly U.S. users, TikTok has become one of the fastest-growing social media platforms. Exploding in popularity just as the COVID-19 pandemic accelerated a massive shift to online shopping, we’ve kept a close eye on the ways in which TikTok is changing the way people shop — and how brands, sellers and creators are cashing in. If Congress is successful in its efforts to ban use of the app, all of this could change overnight.

What’s the latest on Congress and TikTok?

Congress renewed efforts to restrict the company’s U.S. operations in March, but the federal government’s criticism of TikTok and its relationship to China-based parent company ByteDance dates back to 2020 (more on this later). New bipartisan legislation (S. 686, known as The Restrict Act) that would pave the way for a national ban was quietly introduced early in the month, with other activity culminating in TikTok CEO Shou Zi Chew’s appearance before Congress on March 23.

According to Reuters, Chew’s testimony “did little to assuage U.S. worries over TikTok’s China-based parent company ByteDance and added fresh momentum to lawmakers’ calls to ban the platform nationwide.”

TikTok’s ecommerce impact

The trifecta of TikTok’s massive audience, the organically derived pipeline to ecommerce, and its sophisticated algorithm has made it an invaluable tool for small businesses and marketers of all shapes and sizes, and Jungle Scout has the data to prove it, particularly for Amazon sellers.

One key reason for this uptick lies in the organically formed relationship between TikTok and Amazon, which continues to evolve and expand. Amazon’s independent popularity has gained it a strong presence on TikTok, with the hashtag #amazonfinds generating more than 40 billion views across the platform. The hashtag’s popularity makes it easy for consumers to see real people using and reviewing products and creates a potential gold mine for sellers to reach potential buyers. 

Snappy, relatable, and potentially viral content, coupled with Amazon’s affordability and convenience, make for the perfect pairing, as most recently highlighted in our article, TikTok Made Me Buy It: Exploring Amazon’s Viral TikTok Products. 

This massive increase coincides with an increase in activity and demand for video-based content and advertising. Alongside a massive uptick in seller use of newer, video-based advertising products from Amazon itself (seller use of Amazon Video, Amazon DSP and Amazon Live ads rose 79%, 121% and 172%, respectively compared to last year), advertising spending rose for video-focused social platforms like TikTok, YouTube and Snapchat while spending on Facebook, Instagram and Pinterest declined according to our 2023 State of the Amazon Seller Report.

For consumers using TikTok

Customers are more comfortable than ever making purchases from social media sites such as Facebook, Instagram, YouTube and TikTok. 

Data from our Q1 2023 Consumer Trends Report show the percentage of shoppers likely to purchase products directly from top social platforms increased across the board over the past year, with TikTok seeing the largest jump. 

Nearly 40% of U.S. consumers consider themselves likely to make a purchase from the TikTok app, and that percentage is even higher among Gen Z and Millennials — 68% and 50% of whom, respectively, say they’re likely to buy something directly from TikTok. 

And while the majority of consumers (63%) still prefer to start their search for products on Amazon, nearly 20% began with TikTok in the first quarter of 2023, up 44% compared to year-ago data. 

The platform’s influence among the youngest of U.S. shoppers is even higher: 40% of Gen Z consumers actually prefer it for search instead of Google.

For sellers using TikTok

The potential upside for sellers using TikTok — whether via paid ads or by posting their own content promoting their products — can be game changing. As outlined in this article, some products experienced revenue increases upwards of 2,000% after going viral on TikTok. 

With more than one billion active users worldwide, TikTok provides a unique opportunity to reach a wider audience, increase sales, and establish brands in a new, engaging way. Its bespoke algorithm and powerful advertising tools can help businesses target their ideal audience with precision, increasing the likelihood of conversions and sales.

Will Congress ban TikTok?

Congressional action on TikTok first began in August 2020, after then-President Donald Trump ​​signed an executive order that would have banned the platform in the U.S. unless it was sold to a U.S. company within 45 days. After a federal judge blocked that ban, President Biden in 2021 revoked the previous orders and directed a review of apps with ties to foreign adversaries. The U.S. Senate passed the U.S. Innovation and Competition Act in July 2021, which included a provision to ban TikTok and other Chinese-owned apps from government devices, but not for the general public.

The Restrict Act

Earlier in the month, a bipartisan group of legislators led by Mark Warner (D.-Va.) introduced Senate Bill 686, known as The Restrict Act, which would allow the U.S. government to ban the general public from using TikTok and — importantly — any other foreign-owned app/software the federal government determines to be a risk going forward. The bill in its current form also authorizes the U.S. Secretary of Commerce to monitor “e-commerce technology and services, including any electronic techniques for accomplishing business transactions, online retail, internet-enabled logistics, internet-enabled payment technology, and online marketplaces,” setting the stage for future regulation of other ecommerce technology. 

What states have banned TikTok

While no action has been taken on the federal legislation thus far*, some states have since taken up the cause individually, introducing independent legislation aimed at restricting use of the app. Dozens of states have joined the federal government in banning public employees from downloading TikTok on government devices, and in Montana, the Legislature proposed the country’s first statewide ban earlier this month. 

What’s next?

As of the time of publication, TikTok’s fate remains unclear. Congress has not shown signs of backing down, even as Washington insiders question its authority to impose a ban. Still, next steps will likely involve further Senate action on The Restrict Act, which has been referred to the Committee on Commerce, Science, and Transportation for study. 

Information for how to contact your Congressional representatives can be found here. 

*Information current as of April 27, 2023.

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