TikTok’s consumer power makes it a prized target for e-commerce buyers

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TikTok’s pending sale is born out of the complicated U.S.-China trade war, but an acquisition of the social app would bring with it users and data that can fuel Walmart, Microsoft or Oracle’s e-commerce and marketing battles against top competitors.

A Walmart-Microsoft pairing and Oracle are considered the front-runners to buy TikTok’s U.S., New Zealand and Australian businesses. The deal is expected to be worth about $30 billion, according to CNBC. An agreement is close, though TikTok’s China-based owner, Bytedance, is subject to fluid Chinese licensing regulations that could slow the transaction. These regulations are likely retaliatory, given Bytedance is under politically motivated pressure from the U.S. to sell TikTok.

But once a deal is done, the buyer can gain benefits from TikTok that aren’t immediately apparent from TikTok’s primary brand recognition as a service dominated by short videos that usually feature comedy, lip-syncing and dancing.

If Walmart were to become part of a new ownership structure, for example, it would gain access to TikTok’s social media acumen. TikTok's users skew young, providing an entry for emerging consumers, and it has grown nearly 400% over the past year in the U.S., according to AdAge.

“Walmart is extending e-commerce and in-app purchases. Having a social media platform to build engagement provides significant opportunities to add innovation to the payment environment in building a super app which can be used globally,” said Krista Tedder, head of payments for Javelin Strategy & Research, adding initially the plan may not be for integration in the United States but integration with Flipkart in India, where Chinese apps have now been banned.

Walmart beat Amazon in acquiring Flipkart in 2018, and that deal has provided a range of services, consumers and technology to allow Walmart to offer more financial services through its retail operation in India.

India has banned WeChat, Ant and TikTok, though an American owner could have an easier time with local authorities. In the U.S., the political pressure on TikTok presumes an eventual American owner.

Walmart in June made a deal with Shopify to add about 1,200 sellers to Walmart's overall web business. Walmart's e-commerce operation totals about $21.5 billion per year in sales revenue. Walmart has added a fulfillment service for third-party sellers, allowing customers to return marketplace items to physical stores. At the time of the Shopify deal, Marc Lore, who heads Walmart's U.S. e-commerce division, told investors the big-box giant intends to "play offense" in adding users and sellers to take advantage of Walmart's logistics network to grow e-commerce.

The way TikTok has integrated e-commerce and advertising capabilities in other markets is a clear benefit to creators and users in those markets, said Walmart’s public relations office in a statement, adding a potential relationship with TikTok U.S. in partnership with Microsoft could add this key functionality and provide Walmart with an important way for to reach and serve omnichannel customers as well as grow third-party marketplace and advertising businesses.

The actual competitive target for Walmart and Microsoft is likely Amazon.

Amazon competes with Microsoft for cloud technology and Walmart for e-commerce. Microsoft and Walmart face an uphill battle that could benefit from a steady stream of new tech-savvy consumers that come pre-enrolled in a popular social media app.

“TikTok is a platform that not only delivers a large audience, it delivers an audience of millennials and Gen-Z,” said Thad Peterson, a senior analyst at Aite Group. “Walmart can use the platform to promote their products as well as the products offered in their merchant marketplace, and do it at a lower cost than if they were using third party platforms like Facebook.”

Oracle, which would not provide comment for this story, also has lines of businesses that could benefit from TikTok.

Oracle in October 2019 acquired CrowdTwist, a cloud-native incentive marketing program that supports merchant programs in personalized shopping in different channels. In announcing the CrowdTwist deal, Oracle referenced “static single channel” customer acquisition channels, contending incentive marketing and loyalty programs need to be adaptable to changing channel preferences and tied to check-ins and specific behaviors.

Oracle could pair TikTok’s social media tools and youthful user base with omnichannel incentive marketing and Oracle’s open banking APIs to broaden its reach in e-commerce.

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Online payments Big data M&A Microsoft Walmart Oracle U.S. China India