But analysts who have seen the meteoric rise of social commerce in China – a mash of activity on social media and foreign online stores – say Walmart’s interest in TikTok makes perfect sense.
The Chinese version of TikTok, known as Douyin, is one of several apps in the country that have tap into the rapidly growing number of Chinese shoppers who like to buy things on social media platforms.
It’s like a modern version of shopping via QVC or de Home Shopping Network, but much more social and shrinking down to busy screens on mobile devices.
“It’s entertainment plus shopping,” said Kitty Fok, director of market research firm IDC. “This is enormous … it’s an extremely large market.”
The feature is a major driver of revenue for Douyin and other apps, which earn money from ads and commissions on products sold within the apps.
Social commerce is growing fast
Social trade in China was worth $ 186 billion last year, more than 10 times the value of sales made in the United States, according to market research firm eMarketer. The Chinese market is expected to grow 30% this year to $ 242 billion.
Walmart has already recognized the value of e-commerce when it comes to TikTok. The company said Thursday that its interest in the app stems from the way it has “integrated e-commerce and advertising capabilities into other markets”, adding that TikTok could strengthen Walmart’s access to consumers.
The American retailer probably thinks so it could replicate some of that striking Chinese growth in the U.S. market, and get “millions of vendors and advertisers encouraging orders and online commerce,” said Greg Paull, director at marketing research firm R3.
“More importantly, Walmart needs to attract Gen Z retailers because their profile continues to resonate with the population,” he added.
TikTok says it has about 100 million users in the United States. Worldwide, the app has about 690 million monthly active users, and nearly 70% of them are older between 16 and 24, according to R3.
TikTok and its Chinese parent company ByteDance, which also owns Douyin, have come under enormous pressure in the United States.
President Donald Trump this month issued executive orders threatening to ban the app unless ByteDance sells it. The Trump administration says TikTok poses a national security threat because of its ties with China. TikTok denies those allegations and testifies to the Trump administration about the order, which it calls “highly politicized.” TikTok and ByteDance did not respond to a request for comment for this story.
This week, Kevin Mayer – the ex-CEO of Disney who took over the roles of CEO of TikTok and Chief Operating Officer of ByteDance less than four months ago – resigned. He noted that the “political environment has changed significantly” and thus the global role for which he is running.
Walmart confirmed it was interested in buying TikTok just hours after Mayer’s dismissal.
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