Home Business Walmart Confirms Interest in TikTok, But Why?

Walmart Confirms Interest in TikTok, But Why?

by Ruchi Gupta
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Walmart Confirms Interest in TikTok

Walmart Confirms Interest in TikTok – Walmart Inc. (NYSE: WMT) is the latest among the suitors looking to snap up TikTok. The Wall Street Journal reported that WMT is co-bidding for the US operations of TikTok with Microsoft Corporation (NASDAQ: MSFT). It would be the latest – and boldest – gambit for Doug McMillon. The retailer’s CEO, to ensure that Walmart remains competitive against formidable rivals like Amazon.

TikTok is a social media platform where users share videos. The platform has gained popularity across the globe, with millions of videos going viral. Owned by ByteDance Ltd., a Beijing-based tech giant. TikTok has come under pressure from the White House over concerns related to the national security. The Trump administration could potentially ban the video-sharing app from operating in the US unless ByteDance divests its interests.

WMT is looking to exploit TikTok’s social commerce potential

For a long time, Walmart has struggled to leverage its brand to carve a niche in the e-commerce ecosystem. But the efforts have often produced underwhelming results. Amazon, WMT’s main rival in the retail sector, has shown better performance online and brick-and-mortar storefronts. Walmart is desperately looking for opportunities to benefit from the rising trend of online shopping, as well as to remain afloat in the face of tightening competition. From this perspective, one can see clearly why the giant retailer is making the bid for TikTok.

TikTok, like its Chinese cousin Douyin, has become popular with consumers looking for the finest tastes in many sectors, be it apparel, electronics, and more. Influencers create viral content that generates frenzied online shopping sprees. Additionally, the app records an average active monthly userbase in the region of 690 million. If Walmart gets a platform like this, it could seriously rival Amazon in digital advertising. 

Will TikTok be a good investment for Walmart?

Bagging TikTok will be the smartest move for Doug McMillon and his crew for two reasons. For the first time, Walmart will be better positioned to challenge Amazon’s dominance in the e-commerce space. Not only will Walmart give Amazon a run for its money in terms of sales in the digital ecosystem but also in terms of competing for advertisers.

The second reason TikTok is a god investment for WMT rests on the fact that the retailer is joining Microsoft’s hands. Microsoft has vast resources to help with storing user data and the right technical experience in terms of running a social media network. Therefore, Walmart does not have to worry about its inadequacies in that regard.

The deal is facing tough challenges.

But this deal might not be that easy to close. In the first place, the Walmart-Microsoft alliance faces tough competition from contenders such as Oracle and Twitter. Oracle, especially, might pose a greater danger because it has the ear of President Trump.

ByteDance’s reluctance to spin-off TikTok USA is another major challenge that Walmart-Microsoft must scale. On Monday 24, TikTok filed a suit in a US court challenging President Trump’s executive order, which the genesis of the current developments.

Besides, China tightened rules relating to the export of technology on Friday 28, which complicates TikTok’s divestment by ByteDance. With the export restrictions in place, TikTok’s ultimate buyer will need to acquire a license from commerce authorities in Beijing if the deal is to close. As a result of the new developments, Walmart and Microsoft’s stocks dropped 1.9% and 1.0%, respectively.

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