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Why Walmart thinks TikTok is the future of its business

Why Walmart thinks TikTok is the future of its business

For the past five years, nearly every one of Walmart’s big moves has seemingly had one goal: to narrow Amazon’s embarrassingly huge lead in e-commerce.

From Walmart’s $3 billion acquisition of in 2016 to its $16 billion deal for India’s Flipkart in 2018, as well as its recent launch of the Walmart+ membership program, Amazon and its Prime membership service seemed to always be at the forefront of Walmart’s corporate mind.

For the first time in a long time, though, the giant brick-and-mortar retailer is expected to make a big bet that isn’t solely about chasing the Seattle-based tech giant founded by Jeff Bezos: a multibillion-dollar investment in, and multifaceted business partnership with, TikTok, the global sensation and short-form video-sharing app.

And whether the partnership with TokTok turns out to be a brilliant chess move for Walmart, or a disastrous distraction, the moves still send a message that the traditional retailer is trying to invent a digital future where it will be a leader of Amazon rather than a follower in at least one arena. If successful, Walmart could become a leader in online video commerce — an area of retail that has been a hit in Asia, but is still nascent in the US.

Some background, first, on the dramatic and winding business and geopolitical story that set Walmart up for this opportunity in the first place: In August, President Donald Trump cited security concerns over TikTok being owned by the China-based company ByteDance when he signed an executive order that would essentially ban TikTok in the US unless it sold itself to US entities.

Over the weekend, Trump said he would approve a deal that would set up a new entity, called TikTok Global, of which Walmart and the database software company Oracle would own a combined 20 percent. ByteDance investors — some of which are US-based firms — would own the rest for now. As of Monday morning, though, there was still confusion about whether the deal would result in TikTok Global being majority-owned by US businesses or China’s ByteDance instead, so Trump once again threatened to scuttle the deal if US firms did not in fact gain majority control.

Assuming the deal gets done, Walmart says it will “provide our ecommerce, fulfillment, payments and other omnichannel services to TikTok Global.” The details on these arrangements are scarce, but the mentions of “e-commerce,” “fulfillment,” and “payments” indicate that Walmart could help TikTok incorporate shopping features into its app.

That means TikTok users could buy merchandise created or promoted by their favorite TikTok artists without leaving the app, and TikTok could potentially use Walmart’s existing warehouse and “fulfillment” services to deliver the merchandise. Today, when an influencer or a consumer brand advertises a product on TikTok, users almost always have to click through to an external shopping website to make a purchase.

Sure, Walmart could provide incentives for TikTok or its most popular creators to link to in those instances, but a deeper integration into the app could be the longer-term vision. Last month, for example, TikTok experimented for the first time with allowing a popular creator to sell goods through a pop-up page within the app.

The Chinese version of TikTok, called Douyin, is an example of what Walmart and TikTok could do together. Douyin has a deeper e-commerce integration for shopping than TikTok currently does, including strength in live-streaming video commerce, which allows app users to watch live as their favorite personalities or brands show off new merchandise and then have an easy way to buy what they see. Such online shopping trends — a more interactive version of QVC for the digitally-savvy — are already popular in Asia.

No US company, not even Amazon, has figured out how to make this idea mainstream in the states, but they’re trying. Amazon has dabbled in video commerce via its Twitch streaming service and on But it’s early enough stateside that if that behavior does end up growing popular in the US, a TikTok relationship could help Walmart lead the way among retailers.

Walmart’s recent statement also says the commercial agreements with TikTok would “grow our third-party marketplace, fulfillment and advertising businesses.” Like Amazon, Walmart allows outside merchants to sell goods through — on its “marketplace” — so that the retailer can offer visitors a larger variety of goods for sale than it can in its physical stores. The language in Walmart’s statement implies that Walmart might work out a deal so that some of those influencers or brands that sell goods through TikTok might also make those items for sale directly through Walmart through its marketplace.

Walmart could also introduce features that let its existing marketplace merchants more easily advertise or sell their goods through TikTok. Today, the selection on Amazon’s third-party marketplace is much bigger than Walmart’s, but a TikTok-branded storefront, or a direct link for Walmart merchants to advertise through the video app, could help the retailer attract a new set of younger consumers that might otherwise look to Amazon or other e-commerce websites as their main shopping destination.

The move wouldn’t be to directly match Amazon’s sheer marketplace size, but to give TikTok users and/or Walmart marketplace merchants access to goods or customers that they can’t get anywhere else.

To be clear, a potential Walmart investment and partnership with TikTok could still turn out to be a costly distraction for the retailer, and even for the app. Walmart’s leadership team is already busy with the launch of its Amazon Prime competitor Walmart+ in the US, which requires an expensive expansion of grocery delivery to combat Amazon and Instacart along the way, as well as a brutal and costly battle in India with Amazon (via Flipkart) for the future of one of the fastest-growing e-commerce markets in the world.

And Walmart has to also deal with the day-to-day logistical complexities of handling the rapid growth in online shopping that the pandemic has spurred. There’s reason for healthy skepticism about whether the world’s largest brick-and-mortar retailer can execute on this lofty vision even if it gets the chance.

But for once, Walmart seems to be looking past Amazon while making a big bet, instead of simply aiming for Jeff Bezos’s back.

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