Walmart Bids for Tik Tok with Huge Digital Ambitions

Walmart Inc. plunged into the bidding for TikTok, which jolted investors and technology experts alike. At first glance, a brick-and-mortar giant whose core shoppers grew up with rotary phones and three television channels isn’t the likeliest candidate to own an internet app that’s wildly popular with Generation Z. But a closer look at the retailer’s digital ambitions shows the move is part of a broader long-term play to bring more shoppers, advertisers and vendors into the fold as the lines between content and commerce continue to blur.

If successful, Walmart’s bid alongside partner Microsoft Corp. will enhance its soon-to-launch delivery subscription service, making it a more credible threat to rival Amazon.com Inc.’s Prime offering. TikTok could even become a platform to sell Walmart’s products, catapulting the retailer into the emerging realm of ‘social commerce’ against Facebook and its Instagram platform. “For Walmart, this will be like a rocket in their pocket,” says Deborah Weinswig, Founder & CEO, Coresight Research. He adds, “It’s a way to offer customers a hyper-personalized experience in both content and commerce”.

Walmart confirmed Thursday that it’s pursuing TikTok’s U.S. operations in a partnership with Microsoft, but in a brief statement the company offered few details about the bid or the nature of its involvement. That didn’t stop investors from getting excited, sending Walmart’s shares up 4.5 percent, the biggest gain in seven weeks.

Having a serious stake in the world of social media would not only allow Walmart to bolster its marketing efforts, it would also give it access to a rich seam of data that would help it target shoppers more effectively

A deal for TikTok would help Walmart’s CEO Doug McMillon move the company well beyond its brick-and-mortar roots, something he’s been keen to do since taking the helm in 2014. It would buoy Walmart’s third-party marketplace and advertising businesses, which both deliver fatter profit margins than selling Coke and Cheerios.

TikTok would give Walmart access to a large, young and loyal group of users coveted by advertising agencies and their blue-chip clients, who might shift some of their marketing budgets from Google, Facebook and Amazon over to Walmart’s in-house media arm.

Data garnered from TikTok’s users who currently don’t shop at Walmart often, or at all could also influence the types of products that Walmart chooses to carry on its marketplace site, where Walmart doesn’t own the inventory but generates a fee from every sale.

“A social platform like TikTok would give Walmart easy access to the very audience it wants and needs to attract,” asserts Neil Saunders, Analyst, GlobalData Retail. “Having a serious stake in the world of social media would not only allow Walmart to bolster its marketing efforts, it would also give it access to a rich seam of data that would help it target shoppers more effectively”.