Walmart has made a tentative agreement to purchase a 7.5% stake in short-form social video platform TikTok, in partnership with Oracle, which will gain a 12.5% stake. As part of the deal, TikTok is creating a new company called TikTok Global, which will work towards an initial public offering in the US over the next year.
Walmart had previously teamed up with long-term strategic partner Microsoft on a bid which was rejected by TikTok’s owner ByteDance. If approved by the relevant US government agencies, the new deal would see Walmart’s CEO Doug McMillon gain a seat on the TikTok Global board, giving Walmart a strategic advantage in shopper engagement, data acquisition and emerging consumer trends, further strengthening its digital ecosystem.
Walmart also plans to provide its ecommerce fulfillment, payments and omnichannel services to TikTok Global as part of the agreement, indicating the long-term ambition to accelerate TikTok’s commerce capabilities and monetize the platform. Brands should see Walmart’s move as a sign of the strategic relevance of TikTok, and the growing importance of social commerce to retail business models. Brands should continue to monitor ongoing developments related to the deal in order to capture any early opportunities to maximize brand discovery and consumer engagement through the platform.
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