TikTok sellers brace for 'doomsday'

• TikTok may soon go dark in the US due to a divest-or-ban law.
• Merchants that rely on its e-commerce tool, Shop, are scrambling to come up with contingency plans.
• Some are halting warehouse shipments and testing out other apps like Flip and Instagram Live.

The clock is ticking on a potential TikTok ban in the US, and panic is beginning to set in for the platform's sellers and their e-commerce partners.

TikTok Shop, the app's shopping product, has been flourishing in the US. Last year, merchants pulled in millions in sales a month on the platform, including $100 million on Black Friday alone.

But that could all go away in a few days. Without court or presidential intervention, TikTok said it would "go dark" after January 19 to comply with a divest-or-ban law. The company has asked the Supreme Court to push back that deadline. Legal analysts say the odds aren't in TikTok's favor.

Some e-commerce players are already backing off from the app.

A TikTok Shop agency partner executive told Business Insider that a lot of merchants have paused their TikTok Shop plans while they wait to see what happens at the Supreme Court. Some have halted sending free samples to TikTok creators, while others are holding off on shipping products to US warehouses amid the uncertainty. The executive requested anonymity to protect business relationships. Some merchants are even asking for carveouts in contracts with the firm to account for the possibility that TikTok could go dark, the executive said.

Two agency sources told BI that the TikTok Shop team has not communicated anything to them about a possible US app shutdown, acting as if things are business as usual.

A TikTok spokesperson did not provide comment by the time of publication.

Other sellers are testing out alternative social-commerce platforms, such as Flip, Instagram Live, Amazon Live, and YouTube Shopping. And some US merchants are exploring selling goods in other countries where TikTok Shop operates.

Jake Bjorseth, founder of the TikTok Shop partner agency Trndsttrs, described the flurry of TikTok ban planning as "doomsday prep."

"Fortunately, we've slotted much of this in advance, but it's still quite unclear where brands and creators reliant on TikTok are going to flow," Bjorseth said. "It'll certainly be a turbulent few months for folks reliant on it."

Nicole Rechtszaid, co-CEO of the e-commerce agency Ghost Agency, said the company has similarly stopped new business operations related to TikTok Shop and general TikTok content production in preparation for a possible TikTok shutdown. The company's revenue is heavily tied to the app, and if TikTok leaves the US, Ghost may need to consider alternative paths like merging with another company, she said.

"For our existing clients, we've aimed to shift them to alternative platforms, like Instagram Live," Rechtszaid said. "However, it is challenging to replicate TikTok Shop's success on platforms that do not have the combination of an engaging algorithm and native shopping features."

While some Shop businesses are deep into contingency planning, others hope to extract what they can from the platform while it's still around.

"We are continuing on as business as usual until we are told to stop," Lindzi Shanks, the cofounder of the gourmet marshmallow seller XO Marshmallow, told BI. "We also never put our eggs in one basket, so to speak. We have always diversified our social platforms and marketing efforts and continue to do so."

'It's going to put the industry back a few years'

Even as merchants and sellers hedge their bets by testing out alternative platforms, replacing TikTok Shop in the US is going to be tough.

Other apps excel in certain aspects of social commerce. Live shopping app Whatnot said it drove over $3 billion in sales last year, for example. But only TikTok offers an all-in-one place for sellers to run their social-commerce businesses, including a dedicated app store, affiliate marketing tech, and order fulfillment services.

"If it does get banned, it's going to be very bad for live shopping," the first TikTok Shop agency exec said. "It's going to put the industry back a few years."

Michael Herling, a Shop merchant who sells hats on TikTok under the brand Herling Handcrafted, said most of his business comes from TikTok sales and referrals. If TikTok does end up getting banned, he's planning to use Instagram and Facebook to advertise his business.

"It's a real bummer. I built my business on TikTok," Herling said. "I've been pretty depressed about it, knowing that if it gets banned it essentially shuts my business down."