Walmart, in bid for TikTok, sees millions of young shoppers - Los Angeles Times
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What’s Walmart see in TikTok? Millions of young shoppers

Social media app TikTok on a smartphone.
(Anjum Naveed / Associated Press)
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Walmart may be the world’s largest retailer, but it has mostly failed in its efforts to break Amazon’s online dominance. Could TikTok be the answer?

As the Trump administration tries to force a sale of TikTok’s U.S. operations, the only confirmed suitors to buy the fast-growing video app are Walmart and Microsoft, which are teaming up on a bid.

The big-box retailer has given only a vague rationale for why it would want TikTok, but it appears to boil down to its vast audience of young people — and their spending power.

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TikTok’s e-commerce business is small today but it says it has 100 million users in the U.S., or nearly a third of the population. Many are young, the type 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 has declined to comment further on its play for 3-year-old TikTok, which also did not respond to questions about its e-commerce business in the U.S. or the online-shopping strategies of Douyin, a sister service to TikTok in China. The Trump administration is trying to force the sale of TikTok in the U.S. on the grounds of national-security risks because of its Chinese owner, ByteDance. TikTok denies that it is a risk and is suing to stop the administration from a threatened ban.

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Microsoft is working with retail giant Walmart on a deal for TikTok as Trump’s ban looms.

Aug. 27, 2020

Walmart’s online sales have been growing tremendously, nearly doubling in the last quarter, with much of that growth coming during the coronavirus outbreak as people increase their grocery-buying online. But with an estimated share of just 6% of all online sales in the U.S. this year, the Bentonville, Ark., behemoth is still a distant second to Amazon with 38%, according to market research firm eMarketer.

To try to catch up, Walmart has bought several small online clothing brands, only to sell them again a couple of years later. It also recently shut down Jet.com, just four years after buying it for $3 billion.

But analysts are optimistic about TikTok’s potential for helping Walmart crack the online shopping market. They see Walmart using its logistics and fulfillment dominance, with Microsoft’s help on the tech end, to make use of an app that stars random people and keeps users glued to their phone screens.

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Walmart could make TikTok an extension of its sales machine, helping advertisers, creators and others sell products. TikTok users swiping through and buying as part of their experience on the app might not even know of a Walmart connection.

Triller, an L.A.-based video app, has received a big boost from security concerns and political churn around the blockbuster app TikTok.

Aug. 9, 2020

“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 become a digital mall. It lets users shop and pay on the app without needing to go to a retailer’s website. Facebook sees TikTok as a major competitor.

In TikTok’s U.S. app today, some influencers and brands have posted links in their profiles that users can click on and buy things. Some advertisers post links in short videos that crop up in between creators’ videos. Disney+, for example, had a TikTok video ad that let users sign up for the streaming service.

Maybe Walmart could get a cut of revenue from sales made through TikTok, said Lindsay Finneran-Gingras of Hill+Knowlton Strategies, who works with brands on their digital strategies. Instagram charges retailers a fee if a shopper uses Instagram’s checkout tools. The fee is waived for the rest of 2020, however.

Walmart could also use TikTok to promote key sellers from its online marketplace, which it’s trying to develop to rival Amazon, said KeyBanc analysts.

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“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.”

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