A court upheld the TikTok ban — here’s what it means for the app’s social shopping ambitions

The court decision raises the stakes of TikTok’s social commerce ambitions in the U.S. It could all come crashing down if the app is banned in January. As a result, brands, sellers and agencies would lose a vital source of revenue. 

In a statement published on the company’s website on Dec. 6, TikTok implied it would appeal the ruling. “The Supreme Court has an established historical record of protecting Americans’ right to free speech, and we expect they will do just that on this important constitutional issue,” the company said. “Unfortunately, the TikTok ban was conceived and pushed through based upon inaccurate, flawed and hypothetical information, resulting in outright censorship of the American people.”

The decision comes just as sales through TikTok’s e-commerce platform Shop have seen meteoric growth in the 15 months since it launched in the U.S. TikTok Shop tripled its U.S. shopping sales to more than $100 million on Black Friday, according to the company. TikTok Shop also saw a 165% annual increase in shoppers, the company said.

Live shopping, which the video-sharing app has been pushing this holiday season, was a major focus. Stormi Steele, founder and CEO of Canvas Beauty, sold more than $2 million in goods in a single livestream on TikTok Shop.

Despite its relative newness, market research firm EcommerceDB expects TikTok Shop’s gross merchandise volume to swell to $50 billion in 2024, more than double from last year. It’s a small piece of the e-commerce shopping pie compared to the likes of Amazon, which is expected to see $757 billion in GMV in 2024. But the data shows TikTok Shop is picking up steam.

Brands and agencies agree.

Nicole Rechtszaid, co-founder and co-CEO of Ghost Agency, which works with brands like Alo Yoga and Wyze, said TikTok’s power is hard to deny. Ghost Agency was one of TikTok’s first agency partners when it started rolling out Shop on a limited basis in November 2022.

One of Ghost Agency’s clients brings in an average of $1 million to 4 million each month as of the last three quarters. A new client who is cold starting on TikTok Shop was able to nearly break $10,000 in the first month of service just through TikTok Lives. TikTok Shop has become that client’s new focus as a result as it beat out their Amazon and website sales, Rechtszaid said. 

“For some past and current clients, TikTok Shop going away will be devastating to their brand,” Rechtszaid said. “For others, often our larger clients who have larger footprints and history elsewhere, it will be less challenging, but definitely will cause a need for their teams to pivot and assess how to move forward.”

Rechtszaid isn’t alone. 

“We’ve witnessed businesses go from generating $100 in sales on TikTok Shop to $100,000 in just 30 to 60 days,” said Ana Barrett, director of social commerce at marketing agency LiveCraft. “This isn’t an isolated trend; creators have achieved incredible milestones, such as generating over $2 million in sales within just a few hours during live shopping events.”

There’s been plenty of skepticism around the potential for social commerce and live shopping in the U.S. But Mindy Yang, co-founder of TikSage, told Modern Retail that TikTok’s rapid growth is proof of how the platform is changing how people shop. In a bright spot, she believes that if TikTok is banned, alternatives will pop up in its place. 

Inside TikTok’s e-commerce push

TikTok Shop presents a way for the video-sharing app to grow revenue beyond advertising dollars by replicating the success of its Chinese counterpart Douyin, a social commerce app that drives hundreds of billions of dollars in revenue for parent company ByteDance, per The Information. TikTok has already recruited 500,000 merchants, including top brands like Estée Lauder.

Despite the looming January deadline, it’s been business as usual for TikTok.

At an October event in New York with brands and creators, TikTok pitched the value of its e-commerce platform heading into the peak holiday season, Modern Retail previously reported. 

“What TikTok Shop does is seamlessly transition people from content inspiration to product discovery, to check out all of this within the same app,” Nico Le Bourgeois, TikTok Shop’s head of U.S. operations, said in a presentation at the event. “It’s like shopping at a mall or farmers’ market.”

In an interview with Modern Retail at the time, Le Bourgeois declined to comment on the TikTok ban. Instead, he emphasized the platform’s future in the U.S. 

“People are energized about the vision, which is so different from all the other e-commerce that exists today in the U.S,” Le Bourgeois said. 

TikTok says it’s building an ecosystem in order to make social shopping in the U.S. a reality, from partnering with official third-party agencies to enlisting full-on production teams, Modern Retail previously reported.

“It’s like flying a plane as you built it,” Le Bourgeois told Modern Retail in October. “There’s a lot of fixing and tweaking things at the same time.”

TikTok’s recent holiday sales show that this strategy is paying off for agencies, as well. But that success is now in jeopardy.

Rechtszaid expects to reach around $20 million in total gross merchandise value in 2024 across the company’s clients, almost 50 times more than in 2023, as Ghost Agency has gained more clients. But the agency is prepared to pivot if need be. 

“[Ghost Agency] made the decision several months ago to diversify our offering to other platforms,” she said. “We would certainly experience a short-term hit to our business, requiring us to quickly build up a new book of business if our existing clients do not choose to pivot elsewhere as they recover from this hit.”