If the TikTok deal goes through, it can give a massive boost to Walmart’s online advertisement and e-commerce business. Besides, Walmart will have a strong footprint in the social media world competing directly against giants like Facebook, Amazon, and Alphabet.
The U.S. retail giant Walmart Inc (NYSE: WMT) has been the recent entrant in a bid for TikTok. On Thursday, Walmart confirmed that it will partner with tech giant Microsoft for the TikTok bid. Walmart share price has surged by over 7% in the last two trading sessions. On Friday closing, the WMT stock was trading at $140.30 with the market cap falling just short of $400 billion.
Analysts are saying that TikTok could be a game-changer for Walmart in the online advertising space. If Walmart’s deal, in partnership with Microsoft Corporation (NASDAQ: MSFT), goes through, it will give the retail giant a big-ticket to the social media world, competing directly with giants like Facebook Inc (NASDAQ: FB), Alphabet Inc (NASDAQ: GOOG) (NASDAQ: GOOGL), and Amazon.com Inc (NASDAQ: AMZN).
TikTok remains majorly in the news after the Trump administration passed an executive order banning the app, earlier this month on August 6. Also, TikTok has 45 days, up to mid-September, to make the deal through or face an absolute ban. On Thursday, Walmart said that it is confident of meeting the expectations of TikTok’s U.S. customers. Besides, it is also confident in satisfying the concerns of U.S. regulators.
For the first time, Walmart pitched its ad business to large consumer companies, last year in 2019. Besides, the COVID-19 pandemic has also helped the company to register an unprecedented growth in online sales last quarter.
Speaking to Reuters, Scott Smigler, president of e-commerce marketing agency Exclusive Concepts said:
“Walmart is going to see a very quick rise in ad spend” if its bid succeeds. “From a brand standpoint, it’s a no brainer because of the reach Walmart has and the huge shift we’re seeing right now from offline to online (spending). … For all of our brands and retailers that are eligible, we’re going to want them on Walmart for sure.”
Can TikTok Really Be a Game-Changer for Walmart?
Well, it too early to say anything at this point, but yes, the market looks excited about it. If Microsoft and Walmart manage to pull off a complete deal of TikTok’s global operations, the company’s valuations will jump straight away to $80 billion from the existing $50 billion, said analysts.
Besides, with over 100 monthly active users in the United States, ByteDance‘s TikTok remains on top of advertisers’ radar. UBS analyst Michael Lasser told Reuters:
“Connecting with a younger audience is vital to Walmart’s long-term outlook, especially as more digitally native generations move into their prime consumption years. The lines are blurring between traditional shopping, digital shopping and social media. Walmart needs more exposure to this trend.”
Analysts think that Walmart’s e-commerce business combined with the young-customer data of TikTok could be a game-changer for the American retail giant. The short-video social media application has also been a game-changer for the influencers on the platform.
Post the executive order from President Trump, the influencers are also concerned as their livelihood stays on risks. In case the TikTok deal doesn’t go through, it will put thousands of influencers out of business suddenly. Claire Hesser, 18, a former beauty queen, said that TikTok has become a huge part of the youth culture. Speaking to Reuters, she said:
“I feel like if it gets taken away, I feel it’s going to hurt more rather than benefit. … I just wish that they understood that TikTok really does have an impact on our world today and our generation especially.”
Not only influencers but even big brands advertising on TikTok can face the heat. Ariadna Jacob, whose company manages Kids Next Door LA said:
“Maybe people shut down sales in store and they were going to do a e-commerce strategy that involved TikTok. It could affect a lot of industries – especially the music industry because so many songs go viral from TikTok.”
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Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
