With TikTok, Walmart will receive a piece of the info pie on an incredible number of young shoppers
Walmart could be the world’s largest retailer nonetheless it has mostly failed in its efforts to break Amazon’s online dominance. Could TikTok, a fast-growing 3-year-old application filled with goofy videos, be the answer?
TikTok’s US business appears up for grabs, with the Trump administration trying to force a sale, claiming national-security risks because of its Chinese owner, ByteDance. TikTok denies this is a risk and is suing to avoid the administration from a threatened ban.
Others have reportedly emerged, however the only confirmed suitors are Walmart, teaming with tech giant Microsoft.
The big-box retailer has given only a vague rationale for why it would want TikTok, nonetheless it appears to boil right down to its vast audience of teenagers.
TikTok’s e-commerce business is small today nonetheless it says it has 100 million users in america - incredibly, nearly a third of the country. Many are young, the sort of shopper increasingly difficult to reach via traditional media and advertising.
“The future customer of Walmart or Amazon - that’s what TikTok offers,” said Amit Shah, chief strategy officer of VTEX, which creates online marketplaces for brands.
Walmart declined to comment further Friday. TikTok didn't respond to questions about its US e-commerce business or online-shopping strategies baked into Douyin, a sister service to TikTok obtainable in China.
Walmart’s online sales have been growing tremendously, practically doubling within the last quarter, with a lot of that growth coming through the coronavirus outbreak from persons buying groceries online. But the Bentonville, Arkansas behemoth continues to be a distant second to Amazon, estimated to take just 6% of most online sales in america this year, in comparison to Amazon’s 38%, according to advertise research firm eMarketer.
To catch up, it has bought several small online clothing brands, only to sell them again a year or two later. And it recently turn off Jet.com, just four years after buying it for $3 billion.
But analysts are optimistic about TikTok’s prospect of helping Walmart crack the online shopping nut. They see Walmart using its logistics and fulfilment dominance, with Microsoft’s help on the tech end, to employ an app that stars random persons and keeps persons glued with their phone screens.
Walmart will make TikTok into an extension of its sales machine, helping advertisers, creators and others sell products. TikTok users swiping through and buying within their experience on the software might not even understand of a Walmart connection.
“That’s pretty powerful,” said RBC analyst Alex Zukin. It would also help generate data on what shoppers want and do, valuable information for retailers and advertisers.
Instagram, owned by Facebook, has also increasingly turn into a digital mall. It lets users shop and pay on the app without needing to visit a retailer’s website. Facebook sees TikTok as a significant competitor.
In TikTok’s US app today, some influencers and brands have links posted in their profiles that users can select and purchase things. Some advertisers post links in a nutshell videos that appear among creators’ videos. Disney Plus, for example, had a TikTok video ad that let users join the streaming service.
Maybe Walmart could easily get a cut of earnings from sales made through TikTok, said Lindsay Finneran-Gingras of Hill+Knowlton Strategies, who works together with brands on the digital strategies. Instagram charges retailers a fee if a shopper uses Instagram’s checkout tools. The cost is waived for the rest of 2020, however.
Walmart could also use TikTok to market key sellers from its online marketplace, which it’s trying to develop to rival Amazon, said KeyBanc analysts.
“The lines are blurring between traditional shopping, digital shopping and social media,” said UBS analyst Michael Lasser, in a research note. Walmart “needs more exposure to this trend.”
