Walmart seeks TikTok influence to catch Amazon
Walmart may be the world’s largest retailer but it has mostly failed in its efforts to break Amazon’s online dominance.
Could TikTok, a fast-growing 3-year-old app filled with goofy videos, be the answer?
TikTok’s US business appears up for grabs, with the Trump administration trying to force a sale, claiming national-security risks due to its Chinese owner, ByteDance. TikTok denies it is a risk and is suing to stop a threatened ban.
Others have reportedly emerged, but the only confirmed suitors are Walmart, teaming with tech giant Microsoft.
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.
TikTok’s e-commerce business is small today but it says it has 100 million users in the US — incredibly, nearly a third of the country. 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, of VTEX, which creates online marketplaces for brands.
TikTok did not respond to questions about its US e-commerce business or online-shopping strategies baked into Douyin, a sister service in China.
Walmart’s online sales have been growing tremendously, nearly doubling in the last quarter, with much of that growth coming during the coronavirus outbreak from people buying groceries online and then picking them up at the store. But the Bentonville, Arkansas, behemoth is still a distant second to Amazon, estimated to take in just 6 percent of all online sales in the US this year, compared to Amazon’s 38 percent, according to market research firm eMarketer.
To try and catch up, it has bought several small online clothing brands, only to sell them again some years later. And it recently shut down Jet.com, just four years after buying it for US$3 billion.
But analysts are optimistic about TikTok’s potential for helping Walmart crack the online shopping nut. 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 people glued to their phone screens.