In the past 58 years, Walmart went from a humble Arkansas discount store to the world’s biggest retailer. The company won over consumers with low prices and outpaced rivals with its shrewd business tactics. However, the corporation’s leaders understand the brand’s continued success requires it to change with the times.
Why is Walmart Interested in TikTok?
Walmart wants to buy TikTok to grow its e-commerce and advertising business segments.
On its face, the retailer’s interest in the video-sharing service makes as much sense as Facebook mounting a hostile takeover of Baskin-Robbins. But the cleverness of the company’s unexpected move becomes clear when considering its rivalry with Amazon.
After the online brand started selling groceries online, Walmart began to view it as a threat to its core business. The corporation recently launched its own rapid food delivery subscription service to take on Amazon’s Prime program. However, the firm’s bid to buy a social media company is a major competitive escalation.
If Walmart successfully purchases TikTok, it will undercut one of Amazon’s crucial market advantages; access to a vast catalog of consumer data.
With over 800 million monthly active users, TikTok is one of the world’s leading social networking brands. As of last year, the platform’s mobile application had been downloaded over 49 million times in the United States. The retailer decided to buy the service because it identified a massive business opportunity.
Though its strategy is unconventional, Walmart wants to use TikTok’s member data to make more online products and ads. Amazon, Facebook, and Google all earn billions of dollars annually utilizing comprehensive consumer information for direct marketing purposes.
In addition, Walmart will save billions of dollars by purchasing a thriving online social platform instead of building its own.
Why is Walmart Partnering with Microsoft?
Although it has mastered the art of selling low-price goods to consumers, Walmart is not a technology-centric enterprise. For that reason, it partnered with established digital brands to optimize its cashierless checkout and online grocery delivery projects. The retailer also formed a relationship with Microsoft to further its campaign against Amazon.
In 2018, Walmart made a deal with Microsoft to gain access to Office 365 and the Azure cloud computing platform. In turn, the software company benefited from inking an undoubtedly robust long-term services contract.
Walmart and Microsoft’s team-up to acquire Tik-Tok is an extension of that pre-existing partnership. Together, the two brands can split the cost of the acquisition and the revenue generated from its subscriber data.
More than a half-century ago, Walmart made its name by addressing Arkansas consumers’ desire for inexpensive goods. But the firm’s evolution into a multinational powerhouse came from its ability to assess, adapt, and overcome its rivals. Strange as it may sound, the retailer’s purchase of TikTok is an affirmation of its legacy.