Why does Walmart want TikTok? Look at how teens shop in China – CNN
TikTok is a Chinese-owned app that in just a few years has captivated hundreds of millions of teens with its entertaining dance videos, lip syncing performances and comedy routines.
At first glance, the two couldn’t be more different. That’s why Walmart’s ( announcement that it was joining )Microsoft ( )in its bid to buy TikTok’s US operations came as a surprise to so many.
But analysts who have watched the meteoric rise of social commerce in China — a mash up of social media activity and frenzied online shopping — 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 tapped into the rapidly growing number of Chinese shoppers who like to buy stuff on social media platforms.
Users of Douyin and Tencent-owned ( rival Kuaishou, for example, can buy goods after watching short videos about products. They tune into live streams of influencers peddling everything from makeup to furniture. Users can ask influencers about products and get responses in real time, or they can click on steep discounts that are offered only in the apps. )
It’s like a modern version of shopping via QVC or the Home Shopping Network, but a lot more social and shrunk down to busy screens on mobile devices.
“It’s entertainment plus shopping,” said Kitty Fok, managing director with market research firm IDC. “This is huge … it’s an extremely big market.”
The feature is a big driver of revenue for Douyin and other apps, which make money off of advertising and commissions on products sold within the apps.
Social commerce is growing fast
Social commerce 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 acknowledged 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 in other markets,” and added that TikTok could bolster Walmart’s access to consumers.
The American retailer likely thinks it can replicate some of that runaway Chinese growth in the US market, and get “millions of sellers and advertisers fueling commissions and online commerce,” said Greg Paull, principal at marketing research firm R3.
“More importantly, Walmart needs to attract Gen Z shoppers as its profile continues to age 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 aged between 16 and 24, according to R3.
“On TikTok, Walmart has only 1.8 million followers, far less than [teenage influencer] Loren Gray’s 46 million, so there is only room to grow here,” said Paull.
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 to China. TikTok denies those allegations and is suing the Trump administration over the order, which it calls “heavily politicized.” TikTok and ByteDance did not respond to a request for comment for this story.
This week, Kevin Mayer — the ex-Disney executive who took on the roles of TikTok CEO and ByteDance chief operating officer less than four months ago — resigned. He noted that the “political environment has sharply changed” and with it the global role that he signed up for.
Walmart confirmed it was interested in buying TikTok just hours after Mayer’s resignation.