Walmart buying a stake in TikTok may seem like a non-sequitur at first, but the prospect of the giant retailer joining Microsoft’s bid for the video-sharing app's U.S. operations actually makes all the sense in the world to some informed observers.
Yes, Walmart’s involvement would likely scare away other retail advertisers on TikTok. But that’s a big part of the point. Walmart would get potentially exclusive access to the fastest-growing social network and its predominance among Gen Z consumers. The same first-party data the Trump administration fears getting into the hands of the Chinese government suddenly could become a huge asset for the world’s biggest (and U.S.-based) retailer instead.
Walmart’s media business, now substantially trailing Amazon and facing increasingly strong competition from Target, Kroger Co. and CVS, would also be boosted by an asset no other retailer can offer. And its e-commerce business, now significantly behind Amazon and being out-grown by Target, despite nearly doubling last quarter, could get a boost from a social platform that could transform how the next generation of consumers shops.
Walmart confirmed a report from CNBC regarding its interest in TikTok. “The way TikTok has integrated e-commerce and advertising capabilities in other markets is a clear benefit to creators and users in those markets,” Walmart said in a statement. “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. 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.”
Battle for first-party data
“I think it’s brilliant,” says Rachel Tipograph, CEO of MikMak, which offers shoppable ad formats on TikTok, Facebook, Instagram and other digital platforms. Walmart’s interest confirms her thesis that the major battle in digital media and e-commerce is for access to first-party data involving all kinds of players. So in that context Walmart joining Microsoft to edge out Netflix or any other suitor to acquire possibly the most valuable emerging first-party database in the U.S. makes perfect sense.
“You have to surmise that TikTok’s advertising platform will then, using Walmart’s first-party data, be used to drive transactions at Walmart only,” Tipograph says. “If you look at e-commerce traffic, social is the top or No. 2 source of traffic. So they’re literally going to cannibalize one of the largest referral streams for e-commerce and only allow it to go to Walmart.”