This is why Walmart still wants in on the TikTok deal

Platform Economy: Walmart retail store and online marketplace

Walmart stated it is pressing forward with its wish to put money into TikTok as Oracle takes the lead in a partnership with the Chinese video-sharing program.

On Sunday, Oracle beat Microsoft in the battle for the US arm of TikTok using a deal structured as a partnership rather than an outright sale to attempt and navigate geopolitical tensions between Beijing and Washington.

Walmart had teamed up with Microsoft on the unsuccessful bidding.

ByteDance, TikTok’s Chinese owner, was in talks to divest the US business of its hugely popular short-video app to Oracle or some consortium led by Microsoft later U.S. President Donald Trump purchased the sale and said he might otherwise closed it down.

After Microsoft stated it was advised by ByteDance that the Chinese company wouldn’t be promoting it TikTok’s US operations, Walmart stated it would speak further with ByteDance and”other interested parties.”

Asked on Monday if the other parties include Oracle, a Walmart spokesman declined to comment.

For Walmart, a connection with TikTok could supercharge the world’s biggest merchant’s struggle against Inc in e-commerce and internet advertising.

But transforming TikTok from a stage at which some 50 million US everyday users share short-form videos of people dancing and lip-synching to a shopping powerhouse will be a challenge for the Bentonville, Arkansas-based firm, analysts say.

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In the United States, TikTok advertisers now place video ads for goods such as headphones or fast foods involving user-uploaded videos. They are also able to pay for encouraged”hashtag challenges,” where users post movies about the manufacturers’ products.

In June, TikTok courted advertisers with a new program called “TikTok For Business,” which lets brands buy ads that appear when users first open the app. “Don’t make ads, create TikToks,” the company told advertisers, which now include Nike Inc, eBay Inc and Colgate-Palmolive Co among others.

While TikTok is already on its way to building a robust advertising business, it has yet to articulate a comprehensive plan to sell goods on the app.

Facebook has prioritised building out shopping and payments products in recent years across its suite of apps, which include fast-growing Instagram and WhatsApp as well as its namesake “blue” app, suggesting ambitions to emulate do-it-all Chinese super apps like WeChat.

If Walmart seeks inspiration on how to narrow the gap between TikTok and other big digital platforms and also catch up to Amazon, it need look no further than TikTok’s Chinese counterpart.

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Douyin, the ByteDance-owned app that resembles TikTok but is available only in China, started selling merchandise in 2017 and now operates a growing e-commerce operation where more than 400 million daily users shop.

Creators are also encouraged to create shops within Douyin.

While Douyin has relied on and brought new business to China’s big e-commerce platforms such as Alibaba, TikTok’s e-commerce ambitions could be underpinned by Walmart.

The retailer has already accelerated e-commerce plans since the onset of the coronavirus pandemic. Walmart has explored new ways to court shoppers who make fewer trips to their stores. It has invested in curbside pickup and next-day and two-day deliveries.

But it could do much more, say analysts. Walmart could expand into so-called social commerce by hosting TikTok influencers’ online storefronts, and enable shopping directly from the videos and livestreams, stated Scott Smigler, president of e-commerce marketing agency Exclusive Concepts.

A partnership with TikTok, Smigler stated, “would give Walmart a compelling edge over both Amazon and Google, who struggle to help consumers discover new products they didn’t know they needed. That’s the true power of social commerce.”

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All this could go a long way toward attracting a broader and younger audience. The average age of Walmart shoppers is 47, based on information provider Kantar.

“TikTok is valuable because it’s used every day by kids… so as long as they (Walmart) gear their ads towards the audience on TikTok, it will be a success and they could be a real leader in advertising and e-commerce,” said Randy Hare, portfolio director at Huntington Private Bank.

“If they start advertising yard tools and things like that, I don’t think they’ll get much traction.”

The team at Platform Executive hope you have enjoyed this news article. Initial reporting via our official content partners at Thomson Reuters. Reporting by Melissa Fares in New York. Additional reporting by Echo Wang in New York, Sheila Dang in Dallas and Katie Paul in San Francisco. Editing by Kenneth Li, Vanessa O’Connell and Matthew Lewis.

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