That Walmart, the nation’s largest retailer, is anxious to pony up billions to buy into TikTok, an app that appeals to an age group decades younger than its average customer, is evidence of the growing importance of “social commerce,” and of the brand’s need to connect with future shoppers, experts in social media and e-commerce told Forbes.

Oracle and Walmart have agreed to acquire a 20% stake in TikTok’s global business as part of a pre-IPO financing round, the popular video-sharing platform owned by China-based ByteDance said late Saturday, casting Walmart as part of the winning team even after a previous bid with Microsoft fell short.

That Walmart was in the hunt at all initially left some scratching their heads: According to Kantar research, the average American Walmart shopper is 46 years old, white and has an annual household income of about $76,000; while close to half of all TikTok users are between 18 and 24 years old, according to AdAge.

If the deal ultimately is approved in both the U.S. and China, Walmart would benefit from controlling ads presented to younger consumers who influence buying decisions in households today, but will “ultimately control these buying decisions in future years,” noted Johnathan Foster, principal consultant at Chicago-based Proxima Group, a supply chain consulting firm.

More immediately, the deal helps Walmart tap into the growing area of “social commerce,” or shopping via social media, noted Suzin Wold, senior vice president of marketing for Bazaarvoice, a technology company that helps brands find user-generated content for their e-commerce websites.

She noted that the company’s annual Shopper Experience Index, found that 42% of shoppers said they have made a purchase on social media, a number that has likely increased during the pandemic and added that the Walmart deal “sends a message loud and clear that these avenues are the next frontier in retail.”

100%: That’s at least how much social media referral traffic to online stores has increased over the last two years, according to marketing site Blazon. Some 30% of interviewed online buyers said they would purchase directly from Pinterest, Facebook, Twitter, Instagram, or Snapchat. And more than 50% of Millennials would buy through social media. When Nike and Snapchat partnered up to promote Air Jordan III “Tinker” after an NBA All-Star game, they sold out in just 23 minutes.

“After years of failed attempts to attract the youth market, Walmart sees TikTok as their best opportunity to deliver the gigantic youth audience they seek,” said Tom Denari, president and chief strategy officer at Young & Laramore. “But, social networks can be very fragile endeavors, and young people may be turned off if Walmart can’t restrain itself from rushing in to commercialize TikTok too quickly with products young people don’t connect with.”

“Oracle with no experience in establishing or growing a social media app and Walmart, a brand with little to no current connection to a younger audience base that dominates the app, have a tall hill to climb,” said Angela Yang, vice president of growth, for T3, The Think Tank, an Austin-based advertising and marketing agency that specializes in digital media. “Long-term the odds continue to be stacked against them.”

In a bid to reach young people, Walmart has dabbled before in social media ownership. In 2006, it created its own version of MySpace called “The Hub,” with users called Hubsters. In October 2006, just 10 weeks after launch, Walmart shut it down as observers blamed a “lack of interactivity between users,” and “heavy-handed corporate messaging.”

Walmart already has used TikTok successfully for advertising with the #SavingsShuffle and #DealDropDance campaigns, noted Jenna Drenten, associate professor of marketing at Loyola University Chicago, who studies digital consumer culture and marketing, with a particular focus on TikTok. She noted that in one past campaign, users who clicked a link were directed to Walmart, Target, Amazon, and CVS. “If Walmart has ownership in TikTok, the company may be able to more directly divert consumers to shop on their website,” she said. “This equates to a direct boost in sales for Walmart. To a retailer like Walmart, TikTok represents a very lucrative advertising outlet,” and gives the company access to a “huge set of data from consumers.” Alex Zukin, software equity research analyst with RBC Capital Markets sees a symbiotic relationship between Oracle, a company with no real consumer-facing products, and Walmart. “Since Oracle does not have a commerce offering itself, nor does it have logistical capabilities, including Walmart is a savvy move, in our opinion,” he said.

Oracle And Walmart To Acquire 20% Stake In TikTok, Trump Gives His ‘Blessing’ (Forbes)

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