Why Walmart still wants in on the TikTok deal

Related

By Melissa Fares

NEW YORK – Walmart Inc said it is pressing ahead with its goal to invest in TikTok as Oracle Corp takes the lead in a partnership with the Chinese video-sharing app.

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

Walmart had teamed up with Microsoft on the unsuccessful bid.

ByteDance, TikTok’s Chinese owner, had been in talks to divest the U.S. business of its hugely popular short-video app to Oracle or a consortium led by Microsoft after U.S. President Donald Trump ordered the sale last month and said he might otherwise shut it down.

After Microsoft said it had been informed by ByteDance that the Chinese firm would not be selling it TikTok’s U.S. operations, Walmart said it would talk further with ByteDance and “other interested parties.”

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

For Walmart, a relationship with TikTok could supercharge the world’s largest retailer’s battle against Amazon.com Inc in e-commerce and online advertising.

But transforming TikTok from a platform where some 50 million U.S. daily users share short-form videos of people dancing and lip-synching into a shopping powerhouse will be a challenge for the Bentonville, Arkansas-based company, analysts say.

In the United States, TikTok advertisers currently place video ads for merchandise such as headphones or fast foods in-between user-uploaded videos. They can also pay for promoted “hashtag challenges,” where users post videos about the brands’ 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, make 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.

Rivals are far ahead. Facebook Inc has prioritized 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. SOCIAL COMMERCE

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.

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.

Users can watch short videos and livestreams and make purchases directly through the store on the app or click on links to other e-commerce platforms from the videos. 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, said Scott Smigler, president of e-commerce marketing agency Exclusive Concepts.

A partnership with TikTok, Smigler said, “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.”

All this could go a long way toward attracting a broader and younger audience. The average age of Walmart shoppers is 47, according to data 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 manager at Huntington Private Bank. “If they start advertising yard tools and things like that, I don’t think they’ll get much traction.”

(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)

- Advertisement -
SourceReuters

Add your comment(s)

 

Latest

Swine fever found in German breeding piglets

HAMBURG - Prices for breeding (weaner) piglets in Germany have fallen sharply in past weeks following the discovery of African swine fever (ASF) in...

Trump says looking at five women to replace Ginsburg, wants confirmation before election

WASHINGTON - President Donald Trump said on Monday he is considering five women for his nomination for the U.S. Supreme Court seat left open...

‘Preserving US jobs’: Trump officials are working to make it tougher for foreign workers to gain visas

By Ted Hesson WASHINGTON - The administration of U.S. President Donald Trump, much to the disdain and criticism from the Democrats, is racing to toughen...

RV makers are cashing in due to COVID and social distancing

By Timothy Aeppel At least one American industry is rolling toward a V-shaped recovery. Wholesale shipments of recreational vehicles - which have surged in popularity as...

Trump and Biden hit the campaign trail as Supreme Court battle looms

By Trevor Hunnicutt WILMINGTON, Del. - Donald Trump and his rival for the U.S. presidency, Joe Biden, will campaign in two election battlegrounds on Monday...

Trending