TikTok ban would mean innovative start-up retailers lose a vital revenue stream, warns ParcelHero

The US has just approved legislation to ban the popular social media platform TikTok unless it is sold by its China-based owners. TikTok has become a vital retail sales stream in the US and the UK. Its loss would be a significant setback for many of the most innovative new retailers, argues the global e-commerce expert ParcelHero.

Buried in the US Senate’s new foreign aid and national security package, which brings long-delayed military support for Ukraine, is a provision to ban the popular social media platform TikTok.

The US Government finally won approval for $61bn in military aid for Ukraine from reluctant Republicans, in part by including in the bill legislation popular with most Republicans (and many Democrats) to ban TikTok unless it is sold by its Chinese owners ByteDance to a US-approved buyer. The US is concerned TikTok could share data about its US users with the Chinese Government.

The UK-based global e-commerce expert ParcelHero is warning that a ban on TikTok will harm many of the most innovative start-up and SME online retail businesses in the US and here in the UK. ParcelHero is worried that the US may exert pressure on its allies to support its move by also imposing a TikTok ban.

ParcelHero’s Head of Consumer Research, David Jinks M.I.L.T., says: ‘By wrapping legislation to potentially ban TikTok into its foreign aid and national security bill, the US is now set to ban TikTok unless its China-based parent company sells their stake, something they have repeatedly said they will not do.

‘Of course, the fact TikTok is owned by a China-based company is problematic and carries many data security concerns. However, the app is hugely popular with younger people on both sides of the Pond and has become a vital source of revenue for beleaguered smaller retailers in the US and the UK.

‘Crucially, UK TikTok users spend more time on the social media platform than any other country in the world, according to data from the UK digital marketing company Profiletree. 1 in 2 UK users say they frequently purchase products they’ve discovered on TikTok.

‘Globally, 58% of TikTok users discover new brands and products on the app – 14% more than on any other platform. 61% of all users have made a purchase either directly on TikTok or online immediately after seeing an ad on the app.

‘Many of Britain’s youngest and most progressive online retailers are using the platform to communicate directly with their customers and use short-form videos and creator content to promote their products, from personal care and tech to clothing and fashion. This has created new ways of reaching consumers that would have been impossible before.

‘A ban in the US or UK will certainly not be popular with its young viewers. TikTok has 170 million US users and well over 23 million here in the UK. Over 40% of UK TikTok users are aged 18-24 years old. For businesses, this means that TikTok is an excellent opportunity to attract younger customers.

‘The new US legislation, and any supporting move to ban the app here in the UK, could mean many of Britain’s youngest and most entrepreneurial businesses lose this vital retail resource, unless TikTok’s owners do decide to sell.

‘Of course, there is a security concern about the fact TikTok is owned by a China-based company. However, many of the chips in our phones, the cars that we drive and the devices we use every day are made in China and have not faced such a concerted campaign.

‘The US Government is giving TikTok nine months to find new owners before a ban is imposed. We hope to see a resolution before this happens, particularly if the UK feels compelled to follow suit. It could actually be several years before the app is blocked in the US, as TikTok’s owners, ByteDance, may well bring legal action which could reach the Supreme Court.

‘US and UK e-commerce trade is increasingly interlinked. The US was the largest of all UK export markets in 2023. For the four quarters to September 2023, UK exports of goods and services to the US were worth £193.1bn – that’s 21.9% of all UK exports.