WSJ Your Money Briefing - A TikTok Ban Could Mean Millions Lost for Small-Business Owners

Episode Date: February 3, 2025

From clothes to candy, TikTok has become a storefront for a growing number of small businesses. WSJ reporter Ann-Marie Alcántara joins host Ariana Aspuru to break down how a possible ban could impact those who rely on the app to make a living. Plus, we hear from a North Carolina based shop owner who has turned her floral-inspired art designs into a million dollar business.  Sign up for the WSJ's free Markets A.M. newsletter.   Learn more about your ad choices. Visit megaphone.fm/adchoices

Hey Spotify, this is Javi. My biggest passion is music, and it's not just sounds and instruments. It's more than that to me. It's a world full of harmonies with chillers. From streaming to shopping, it's on Prime. Here's your Money Briefing for Monday, February 3rd. I'm Arianna Aspuru for The Wall Street Journal. I really started posting on TikTok during the pandemic and my business just completely blew up.

That's Elise Burns. She's a 27-year-old small business owner in North Carolina. She's been selling floral-inspired art goods like stickers, stationery, and laptop sleeves online since she was 18. I've been on Instagram for a while, but TikTok is really kind of what got me a lot of traction. That is what really took my business to like the next level of being possibly like a full time job for me.

So I did twenty thousand dollars in revenue on Etsy in 2019 and then I did three hundred and sixty thousand dollars in revenue on Etsy in 2020 after I got on TikTok. So that was just this huge huge jump that made me think it could be a full-time job. And then 2021 I did 1.2 million, 2022 I did 1.8 million, 2023 I did 2.9 million and then in 2024 we hit $4 million in revenue. Behind the viral memes and trendy dances, a growing number of shop owners like Elise have capitalized on the platform and created lucrative businesses by connecting with customers on TikTok. But the looming threat of a possible U.S.

ban on the app would be a serious hit to her income. Elise said 25% of her sales come from TikTok Shop, with the bulk coming from direct website sales. I was like, dang, if this is gone for even a week, that's, you know, 10, 15, $20,000 that could be just kind of evaporated. The circumstances of the whole thing is still just keeping me pretty nervous.

So while I have these other sources of revenue and these other ways to reach people, my email list, Instagram, YouTube, you know, it doesn't mean that I'm going to be able to reach all of them. And my business relies on reaching everybody right now. So what is the uncertainty around TikTok mean for the businesses relying on it? Wall Street Journal reporter Anne Marie Alcantara wrote about it. And she joins me after the break. The future of TikTok remains unclear, and the millions of dollars that some shoppers are making off the app are at risk. Wall Street Journal reporter Anne Marie Alcantara joins

me to talk through it. Anne Marie, where do things currently stand with TikTok? So the app is back in action. However, if you deleted it or removed it from your phone, you can't download it again. Still, it's still not in the app stores. But if you had it, you can use it as you normally would have. And President Trump has also extended the decision-making around the app. And it's unclear if there's gonna be a buyer, if there's gonna be more challenges, or if TikTok will go away once again. And how is this uncertainty and possible ban

affected businesses who rely on the app? They just don't know what to say to the customer. It's like, should they run more sales to clear their inventory for TikTok Shop? Some business owners I spoke to mentioned how they expanded their warehouses and inventory to market to the TikTok shop consumer. And now if that goes away, they still have rent to pay and leases that they signed. And so it's

also a confusing time for them. And where do they pivot? Who do they reach out to now for customers? That's a very, very uncertain time. Yeah. And on the customer side, you're not sure if your favorite shop is going away, where to go next with them. So it seems like confusion on both sides. Precisely, and as a consumer, you used to be able to just come across shop videos from either the actual shop or content creators and now that might go away. And you really have to go search for it this time. To dive into TikTok a little more, what are some of the ways that people make money off of it?

If you're a creator, you can sign up for their creator revenue share program. And if you're a business owner, you can sign up for TikTok shop, sell products through there. They also have an affiliate program where, let's say, you have a business, you have things you want to sell. You can just click a box basically and content creators on the app can start selling your product and they get a commission. And it's just a nice easy way for you to kind of influence your marketing without needing an agency or a big budget for that. Sort of the

less direct way of making money which is people find out about your business on TikTok and then they go to you in real life or to your website etc to buy from you but they saw you first on TikTok. Why have users been able to find such success selling their products through TikTok? Like what makes it so special? It's sort of the mix of entertainment and commerce. According to TikTok, 52% of TikTok users that come across small business content make a purchase. 82% of users say they've discovered a small business on the app before going to the company on another site.

And so it's not an insignificant amount of people that are being exposed to small businesses on the app. TikTok is really perfected in some ways. Scrolling through a funny video, something that's interested to you, and then the next video will be a similar format, but selling you something, and it's more relatable. They show you the product, they might put it on if it's makeup or skincare or something or clothing. And then the next video will be something fun again, something that you're interested in. And so that sort of mix is really hard to find in other social platforms. We've seen other social media sites rise and fall in the past. We remember MySpace, Friendster, Vine, and the people or businesses on those apps had to pivot.

What are some steps that someone who's making money off of social media can take to be prepared for whatever comes down the road for TikTok? It all comes down to diversifying your channels, which is a tried and true marketing tactic that I did not make up. But if you're doing well on TikTok, tell people to go to your website,

promote them to follow you on other social sites, and make those areas just as lively. You might have to tweak the content a bit because, you know, every platform is a little bit different. But the point is just to keep getting your customers to see you across different platforms. And I think that's the biggest learning here is that TikTok juice is great, but you need to make sure your customers can still find you elsewhere. The TikTok algorithm is so tailored to you specifically, and it's one of those algorithms that is ongoing, like there is no end to it. How does that factor into like the success that these businesses have seen? Like are they worried they can't replicate it? Absolutely.

Many of them find their community and their people through the algorithm. For example, one company I spoke to, they specialize in Asian American culture type of products, and people have found them and resonated with those products because of the algorithm. And that sort of accidental find isn't as possible in other platforms, and that magic is just not easy for these business owners to replicate elsewhere.

That's WSJ Reporter Anne-Marie Alcantara. And that's it for your Money Briefing. This episode was produced by Jess Jupiter with supervising producer Melanie Roy. I'm Marianna Aspuru for The Wall Street Journal. Thanks for watching!