Walmart’s planned investment in TikTok is being called “transformative.” Another analyst predicted the deal could “redefine retail” across the industry. “It is a bigger-picture opportunity,” said Oliver Chen, a retail analyst at Cowen.
Known for its homogeneous big-box stores in rural and suburban America, Walmart has turned more than a few heads with its newly announced multibillion-dollar stake in a video app that is synonymous with the fun digital lives of young people.
As in the early days of many tech investments by large corporations, the details of how Walmart will use TikTok are fuzzy. But one thing is clear: Walmart now has something that its rival Amazon does not. It can engage with consumers not just when they are buying something on the retailer’s website, but while they are creating and consuming viral videos.
The retailer could, for example, embed advertisements in the user-generated videos with links to the Walmart website or siphon data from the site’s tens of millions of users to glean their shopping habits based on the content they posted.
The intrigue surrounding the plan by Walmart and its co-investor in TikTok, Oracle, has been heightened by the geopolitics of the deal, which President Trump threatened to block if China retains any ownership in the company.
But away from the world stage, Walmart has been making a series of moves that are already transforming the company and, by extension, the broader U.S. retail sector.
Most have involved groceries, a mundane business that seems a far cry from TikTok videos. But it has helped Walmart gain one advantage over Amazon, particularly during the pandemic. Online grocery pickup, which allows customers to order their food online and retrieve it outside the store, is at the center of this strategy.
This month, Walmart announced a new subscription delivery service, Walmart+, which some have billed as the company’s answer to Amazon Prime. For $98 a year and minimum orders of $35, customers can have unlimited deliveries to their homes.
On Tuesday, UBS analysts predicted that Walmart+ would have 10 million subscribers by the end of 2021. Amazon Prime, which costs $119 a year, has about 150 million subscribers.