A different take — Walmart’s interest in TikTok is actually quite savvy. It’s the canary in the coal mine for what all retailers will experience in the next 2 years as they fight Amazon internationally on physical and digital fronts. A quick thread

TikTok and Instagram are the new TV for an entire generation. Reaching folks on these platforms is key to building the next 20 years of digital demand.

Walmart’s core demographic in the US is already very active on TikTok. They are the 70%+ of the population that are budget strapped, but lucrative customers.

Amazon is starting to push aggressively downmarket. By selling groceries out of physical stores and more often than not beating Walmart’s prices. They already have a robust 100M+ household base with emails and phone numbers that they can drive to any new initiative.

To catch up to Amazon, Walmart are digitizing their stores, pushing store pickup and Walmart+ (their Prime competitor) heavily.

While Walmart’s customer base is comparable in size to Amazon, it was built over decades via store launches and TV. New digital efforts are doomed to fail to drive existing customers back due to a lack of emails or phone numbers in Walmart systems. This is an existential crisis.

A nasty, expensive street fight is now looming on multiple digital platforms by Amazon and Walmart who both sell commodities and are trying to lock their customers into memberships.

Unfortunately, online advertising is a dark art and the cost of acquiring customers on Facebook and Instagram (the "FB user acquisition tax") has been trending up over the years. It’s not as simple as running the same ad everywhere on national TV.

If Walmart miraculously has a stake in a huge international ad platform like TikTok, that may just stack the odds in their favor, especially with Kevin Systrom from Instagram on their board. This would be a brash, blunt move in their favor. https://twitter.com/turnernovak/status/1307062135462203393?s=12

Walmart has stores with heavy TikTok audience overlap in two cutthroat markets: China (438 stores) and via their stake in Flipkart, India too.

Not to mention Walmart CEO Doug McMillan being one of the shrewdest capital allocators currently operating, even if his team winds up making strange digital moves sometimes (a topic for another day) https://twitter.com/Post_Market/status/1278090031945654277?s=20

So now the path for Walmart surviving is clear:

1. Turn on pickup and delivery at all Walmart stores as fast as possible, connect them to new digital products and drive retained use.

2. Connect up Walmart’s own measurement tools at Walmart Media Group to TikTok and make more CPG marketing revenue, potentially adding extra margin when competitors advertise on TikTok.

3. Promote Walmart’s new apps cost-effectively to TikTok audiences that overlap, maybe even acquire net new customers. Spend aggressively on this subsidized platform to bring their core in-store audience online.

Walmart now has to pull off a shift in strategy and execution similar to Facebook going from HTML5 to native mobile. https://twitter.com/drose_999/status/1307445393450389504

The ground has shifted again for all of us in e-commerce, digital ads and consumer digital products. It’s going to be quite an eventful ride.