Though Microsoft failed in its bid for an acquisition of TikTok’s US assets, Walmart is still pursuing some level of partnership with the popular app to boost its e-commerce ambitions and birth a new presence in the social commerce marketplace. Many were shocked to hear Walmart was involved in the TikTok talks at all but, given their past involvement in Flipkart and JD.com, it is not their first foray into tech-intensive investments. Walmart likely seeks to leverage the digital strategies of major Chinese e-commerce firms that have been seen huge success in integrating their platforms into social media. This strategy could inspire Walmart’s retail competitors to adopt a more aggressive online presence as well.
Related ETFs, Stocks: Global X Social Media ETF (SOCL), ProShares Long Online/Short Stores ETF (CLIX), Walmart Inc. (WMT), Alibaba Group Holding Limited (BABA), JD.com, Inc. (JD)
Amidst talks of Microsoft acquiring TikTok’s US assets, the world’s largest retailer, Walmart, shocked everyone by announcing that they had joined up with Microsoft to make a bid.
TikTok, based in China and facing scrutiny for its handling of American user data, was threatened with a total shutdown of its US operations in August. Though Microsoft’s offer fell by the wayside last week, making way for Oracle Corp to swoop in and take over as TikTok’s trusted technology provider in the US, Walmart says it’s still engaged in talks with TikTok.
While a lot of things remain up in the air since Oracle’s proposal falls well short of the total asset sale President Trump seemed to be in favor of, the company’s chairman, Larry Ellison, may be able to curry favor with Trump. Ellison has a strong personal relationship with the President and is a vocal supporter of his re-election campaign. In August, on the topic of an Oracle deal with TikTok, Trump remarked: “I think Oracle is a great company, and I think its owner is a tremendous guy… I think that Oracle would be certainly somebody that could handle it.”
If Oracle’s terms are approved and a US TikTok ban averted, that could give Walmart a very solid chance at unlocking access to hundreds of millions of digital consumers and a lucrative audience for ads. In a filing this week, TikTok said it has close to 100 million monthly active US users. That’s up nearly 800% from January 2018.
A Walmart-TikTok tie up would be a very interesting crossroads for the integration of social commerce and e-commerce. The company’s stock price hit a 52-week high on the back of the news.
Based on Next-Cart definitions, e-commerce is simply buying and selling through the Internet, typically focusing on goods and services in traditional commerce. However, customers will not directly choose but select goods through photos or product descriptions provided by the seller. Social commerce is similar to e-commerce, but instead of going directly to a retailer’s website to shop, goods are bought and sold through social networking sites and applications. Typically, social commerce capitalizes on brands’ social media presence or sponsorship deals with popular creators and influencers on platforms like Twitter, Snapchat, Instagram, etc.
Walmart’s plans will very likely take cues from the social commerce business model that’s already proven successful by top Chinese e-commerce firms…