Walmart wants to go viral with TikTok

The retailer revealed plans to join Microsoft in a bid for the social media firm's U.S. assets on Thursday

A Walmart in Rosemead, California, U.S. Photo: Reuters/Mario Anzuoni/File Photo
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Wall Street was swift to see the rationale behind Walmart jumping into the fray to buy TikTok – access to millions of young, digitally savvy users who could help the 60-year-old company boost its online sales.

The retailer revealed plans to join Microsoft in a bid for the social media firm’s U.S. assets on Thursday, hours after the video company’s chief executive said he would step down.

READ ALSO: How TikTok went from a global sensation to Trump’s target

Analysts said Walmart picking up a stake in the short-form video app, which is owned by China’s ByteDance and claims to have about 100 million active monthly users in the United States, could be a game-changer for the world’s largest retailer.

“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,” UBS analyst Michael Lasser said.

READ ALSO: TikTok and Brazilian PagSeguro partner up to provide digital accounts to users of the Chinese app

“The lines are blurring between traditional shopping, digital shopping, and social media. Walmart needs more exposure to this trend.”

Companies have been scrambling to advertise and sell on apps like TikTok and Facebook‘s Instagram, where shopping has surged, as people spend hours every day scrolling through the latest viral videos from their favorite influencers.

About 23% of U.S. users reported making a purchase on Instagram earlier this year, compared to just 15% in late-2019, according to a survey conducted by RBC Capital Markets.

A combination of Walmart’s e-commerce operations and customer purchase data with Microsoft’s Azure cloud platform and TikTok’s mostly millennial and Gen Z monthly users could create a digital behemoth even more dominant than or Facebook, Jefferies analyst Christopher Mandeville said.

However, any potential deal will come under intense regulatory scrutiny, with TikTok under fire from the White House as a potential national security risk.

Oracle has also bid for TikTok’s U.S. operations.

Twitter livened up with memes after Walmart announced it had teamed up with Microsoft to buy a social media app less than three-years-old.

“Walmart and Microsoft buying Tiktok easily the most ‘hello fellow kids’ move of all time,” Twitter user @ericzawo said.

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