Walmart is getting in on Microsoft’s bid to acquire TikTok from Chinese technology company ByteDance, a company spokesperson confirmed to Sourcing Journal. TikTok is nearing an agreement to sell its U.S., Canadian, Australian and New Zealand operations in a deal to a suit that would likely be in the $20 billion to $30 billion range, a CNBC report said.
If the Walmart/Microsoft bid wins out, this would ultimately give Walmart its own social network and another avenue to promote its business to an entirely new audience largely composed of Gen Z shoppers. While Amazon has its own hub of content including Prime Video and Amazon Music, Walmart’s entrance would represent a significant content play that can directly influence potential consumers.
“Brands will spend their marketing budgets where consumers engage with content at scale. The name of the app or service or who owns it does not matter,” said, Yuval Ben-Itzhak, CEO of marketing software-as-a-service platform SocialBakers. TikTok, he added, “is well known for its velocity and brands could be concerned that a slower moving platform will just slow them down.”
Recent research from Influenster shows that North American consumers turn to their social channels to help influence their shopping decisions, with 82 percent of respondents indicating that social media is the most common channel to get information about a brand and its products, and 62 percent agreeing that a social media presence influences their decision to purchase from a brand.
But social commerce from a sheer buying perspective has been an area that has yet to truly gain traction in the U.S. amid many efforts by top social networks to try, most recently Facebook with the launch of Facebook Shops and last year’s introduction of Instagram Checkout.
Suzin Wold, vice president of marketing at user-generated content and reviews provider Bazaarvoice, noted that platforms like Facebook and Twitter “were once used as an escape from everyday life” but are now on “information overload,” hurting their chances at being true influencers in commerce.
“In contrast, TikTok is the destination for fun and community, and brands should keep all of these platforms in mind when developing their social strategy,” Wold said. “With usage of TikTok more than doubling since July 2019, brands should take notice of its importance as a platform and also note the ease to which user-generated content can be quickly and efficiently sourced.”
TikTok may have an entirely different advantage in terms of numbers, particularly mobile-savvy youths who may be able to adapt easily to shopping through the platform. The company claimed earlier in August that it has 100 million monthly active U.S. users and 50 million daily active U.S. users.
The platform, known largely for its short-form mobile-friendly videos and giving rise to a new generation of social media influencers, is having a test run to determine whether social commerce will be a hit.
TikTok hosted its first shoppable livestream in a collaboration with livestreaming video commerce platform Ntwrk and artist and designer Joshua Vides on Aug. 25-26 to launch an exclusive limited-edition apparel collection in an effort to target and influence Gen Z shoppers. Livestreaming, while not nearly as popular in the U.S. as it is in China, has grown throughout the pandemic and can give shoppers an access point to discovering and buying new goods, particularly from influencers.
Brands such as Hollister and Skechers have already leveraged TikTok for advertising purposes, with the apparel seller launching a denim-focused campaign that features science educator and ’90s TV personality Bill Nye, along with TikTok stars and “jeanealogists” Charli and Dixie D’Amelio and Noah Pugliano. The campaign will be featured across Hollister’s social channels and in stores throughout the fall.
The “Skechers Challenge,” in which a song about the brand by hip hop artist DripReport was remixed on the platform, garnered tens of millions views on the app, and contributed to the brand’s 400 percent sales boost in April.
Walmart has not stated outright how it would use the TikTok platform, or if it would be included within its twice-delayed Amazon Prime competitor service Walmart+, but it did highlight these advertising capabilities and the way they’ve integrated e-commerce into the mix as “a clear benefit to creators and users in those markets.”
“We believe a potential relationship with TikTok U.S. in partnership with Microsoft could add this key functionality and provide Walmart with an important way for us to reach and serve omnichannel customers as well as grow our third-party marketplace and advertising businesses,” a Walmart spokesperson told Sourcing Journal in a statement. “We are confident that a Walmart and Microsoft partnership would meet both the expectations of U.S. TikTok users while satisfying the concerns of U.S. government regulators.”
Several other bidders now stand in the way of Walmart and Microsoft, including a consortium led by computer software giant Oracle and its co-founder and executive chairman Larry Ellison, which reportedly submitted a proposed deal for $20 billion in cash and stock.
Walmart had previously worked on a deal with Softbank to acquire TikTok, according to CNBC reports, but that bid faced resistance from the U.S. government because it did not include a cloud technology backbone component.
A potential deal comes as TikTok continues to fight an effective ban in the U.S. after the Trump administration deemed its data storage and security a national security risk due to ByteDance being based in China.
Amid pressure from President Trump’s push on ByteDance to sell TikTok’s U.S. operations to an American company by Nov. 12, TikTok CEO Kevin Mayer announced on Aug. 26 that he was leaving the social media platform after being on the job for nearly three months. Vanessa Pappas, head of TikTok’s U.S. business, will run TikTok upon Mayer’s departure.