Walmart confirmed that it would join Microsoft to bid for Tiktok’s purchase in a deal that would boost its e-commerce strategy, giving it leverage against Amazon. If the bid succeeds, Walmart will own TikTok stake with Microsoft. A statement from the company says that the Tiktok purchase would grow both its third party market place and its advertising business.
“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,” it says.
The omnichannel model is part of Walmart’s e-commerce strategy, which has seen the company use its stores as fulfilment centres growing its sales by 9.3%. Analysts believe that that third-party sellers and advertisers on TikTok could be the push it needs to make its e-commerce business profitable.
TikTok now boasts an average monthly user base of over 100 million and 52 million weekly users, which could help Walmart tap into the teenage and Gen Z market. Further, the company could unlock more advertisement revenue as users spend more time on the short video app. in December 2019, users spent as much as 16 hours 20 minutes a month on the platform, compared to 5 hours 4 minutes in August 2018.
Walmart believes that the partnership will meet expectations of TikTok users in the U.S., and satisfy security concerns of government regulators.
Daniel Ives, Managing Director and Senior Equity Research Analyst at Wedbush Securities, believes that the Walmart/Microsoft bid has between 85% and 90% chance to succeed.
CNBC reports that Walmart wanted to own a majority stake of TikTok, earlier teaming up with Google and Softbank to be the exclusive e-commerce and payments provider for Tiktok. However, the U.S. government national security concerns dictate that a technology company should lead the TikTok purchase.
Bytedance is nearing an agreement to sell TikTok in US, Canada, Australia and New Zealand for between $20 billion and $30 billion, likely to announce the successful bidder within 48 hours. Oracle offered a $10 billion in cash and $10 in stock and a 50% profit backflow to the TikTok parent company for two years.