TikTok has become a source of enjoyment yet also it is a lifeline for a lot of small and medium-sized enterprises in the US, particularly those run by people of colour. — AFP
For many people, TikTok is a source of entertainment. But for many small and medium-sized businesses in the United States, especially those owned by persons of colour, it's a financial lifeline.
A new study from Oxford Economics found that 57% of Black-owned SMBs (Small Businesses) say their access to TikTok is "critical to their business's existence," followed by 47% of Asian-American and Pacific Island-owned SMBs, and 44% of Latin and Hispanic-owned SMBs.
By comparison, only 36% of White-owned small and medium business owners considered TikTok critical to their businesses. In general, the findings showed that 39 percent of small and medium businesses say their access to the app is critical to their survival. The study, which was commissioned by TikTok in an effort to gauge the US economic impact of the app, was based on a 2023 survey of over a thousand SMBs.
"Social media provides these businesses with opportunities that may have historically been denied. Barriers such as access to capital, contracts with marketing firms, and access to media all may be much less critical when promoting business capabilities on TikTok," the report read.
Small and medium businesses generated US$14.7bil (RM69.8bil) in revenues on TikTok in 2023, thanks to their paid advertising and marketing on the app, the study found. Their use of the app supported 224,000 jobs, with the largest number of jobs in California, Texas, Florida, New York, and Illinois, Oxford said.
Out of the 12 sectors surveyed, businesses in the food and beverage industry reported the largest impact with US$6.4bil (RM30.4bil).This was followed by health and wellness businesses who generated US$2.2bil (RM10.4bil).
An executive summary, as well as a TikTok press release, was first issued on March 13, on the same day the House of Representatives passed a bill that can potentially ban TikTok, unless there is a change in ownership.
In anticipation of that change, many small businesses have started preparing to shift to other social media apps, in case of a ban. But they realize a TikTok ban would be an immeasurable loss, according to Brandon Hurst, owner and CEO of Los Angeles-based Brandon the Plant Guy. He has more than 187,000 followers on TikTok.
Hurst started selling plants in the pandemic. But he said his sales grew significantly when he joined TikTok Shop about a year ago. He said he sold around 50,000 plants within a year since he started advertising on TikTok. In comparison, he sold a combined total of 20,000 plants in his first three years in business.
Hurst notes that lawmakers do not understand the value of the app for entrepreneurs and think it's just like any other social media app.
"I think they think there are a lot of social media apps and we could just go join another app and still continue to promote our business. I don't think they realize that TikTok has the true unique ability to reach people you would never reach on any other app," he told Inc. – Inc./Tribune News Service
