Wal-Mart: Why should a “supermarket” buy TikTok?

Walmart Teams Up With Microsoft on TikTok Bid

Walmart Teams Up With Microsoft on TikTok Bid

Retail giant Wal-Mart’s bid for short video platform TikTok (TikTok overseas version) shocked investors and technical experts, but what happened next may be more disruptive and highlight its digital ambitions.

On the surface, this old-brand physical retail giant may not be the most suitable buyer for TikTok, after all, the latter is more popular with the so-called “Gen Z” . But a closer look at its digital ambitions reveals that as the line between content and commerce continues to blur, this move is part of a broader long-term plan to attract more shoppers, advertisers and sellers.

If successful, Wal-Mart’s bid with partner Microsoft may also enhance its upcoming delivery subscription service , making it a more powerful threat to rival Amazon’s Prime service. TikTok may even become a platform for selling Wal-Mart products, pushing the 58-year-old retailer into the emerging “social e-commerce” field to compete with Facebook and its Instagram platform.

Deborah Weinswig, the founder and CEO of CoreSight Research, a market research organization, said: “For Walmart, it’s like having a rocket and providing customers with content and business. Provide a hyper-personalized experience.”

Wal-Mart confirmed on Thursday that the company is cooperating with Microsoft to bid for TikTok’s US business, but in a brief statement, Wal-Mart provided little details about the bid or the nature of its participation. But this did not stop the excitement of investors, pushing Wal-Mart’s share price up 4.5%, the largest increase in seven weeks.

The TikTok acquisition will help Wal-Mart CEO Doug McMillon to free the company from physical restrictions, something he has been passionate about since taking the helm in 2014. This will boost Wal-Mart’s more profitable third-party market and advertising business.

In addition, TikTok will give Walmart access to the large, young and loyal user base that advertising companies and their blue-chip customers dream of. These users may transfer part of their marketing budget from Google, Facebook, and Amazon to Walmart’s internal media department.

The data collected from TikTok users may also affect the types of products Wal-Mart chooses to sell on its website. Third parties sell products on the Wal-Mart platform. Wal-Mart does not provide warehousing services but will charge commissions. TikTok users have just entered their golden age of consumption, which makes now an ideal time to attract them.

Neil Saunders, an analyst at GlobalData Retail, a market research firm, said: “Social platforms like TikTok will allow Walmart to easily reach the audiences it wants and needs to attract. It occupies an important position in the social media field. , Which not only allows Wal-Mart to strengthen its marketing efforts, but also allows it to obtain a wealth of data to help it target shoppers more effectively.”

“Miracle Formula”

RBC Capital Markets analyst Mark Mahaney said the combination with TikTok will allow Walmart to take advantage of purchases made through social media. RBC found that a quarter of US Instagram users made a purchase on the site this year , up from 15% a year ago. Currently in the United States, there are not many direct transactions on TikTok, but under the management of Wal-Mart, this situation may change.

Before leaving last year to start Tomorrow Retail Consulting, Jordan Berke helped lead Wal-Mart’s digital business in China. He said: “Combining social participation and commerce is the magic formula of the future retail industry. Facebook is in a leading position in becoming a super app in the United States, but this will make Wal-Mart and Microsoft firmly in the second position.”

Analyst Mahaney said that Amazon still holds the lead because it has a detailed shopping history of nearly 500 million people, most of whom make Internet shopping on its website. In comparison, about 265 million people shop at Wal-Mart stores or its website every week, but Wal-Mart knows very little about them. This is why Walmart launched the new Walmart + subscription service, which may help close this gap.

Sufficient cash

As the world’s largest brick-and-mortar retailer, Wal-Mart has a huge cash surplus and debt, for which it may not be difficult to complete the TikTok acquisition. The real challenge is how different this social media is from the digital media previously acquired by Walmart (such as Jet.com or the Indian e-commerce site Flipkart, as well as investing in JD.com).

Rupesh Parikh, managing director of the brokerage firm Oppenheimer&Co, said: “Walmart is neither a social media player nor a real technology company. This may be the biggest risk. From this perspective, we think there is no Many reasons for strategic acquisition.”

But for Dong Minglun, this reason is sufficient when traditional retailers are in turmoil. He has a list of the biggest retailers in years on hand, reminding him to keep adapting to the new situation, otherwise he will repeat the bankruptcy of chains such as Kmart and Woolworths. Letting TikTok join in may help him deal with these challenges.

For more such interesting article like this, app/softwares, games, Gadget Reviews, comparisons, troubleshooting guides, listicles, and tips & tricks related to Windows, Android, iOS, and macOS, follow us on Google News, Facebook, Instagram, Twitter, YouTube, and Pinterest.