Why the Walmart-TikTok partnership signals the future of e-commerce

Why the Walmart-TikTok partnership signals the future of e-commerce (Photo: Pexels)

The rise of e-commerce within the retail industry has been nothing short of spectacular, as it upended supply chains and forced stakeholders to look at expediting operations. Innovation within the e-commerce last-mile space has blurred differences between online retail and physical store retail. Today, retail behemoths like Walmart and Amazon look to widen their consumer reach with a mix of e-commerce and storefront shopping options. 

Recognizing the importance of storefront retail, Amazon came up with Amazon Go, a chain of convenience stores that fuse digitalization with the physical shopping experience. In 2017, Amazon also bought supermarket chain Whole Foods to gain a foothold in the grocery supply chain, further widening its consumer base.

Walmart has tried inching into online retail. Aside from pushing its e-commerce platform, the company has also embarked on stitching deals globally to bolster operations — like its acquisition of the Indian e-commerce giant Flipkart or its strategic cooperation with JD.com. 

Last week, Walmart concluded a marquee deal with TikTok, taking a 7.5% stake in the Chinese video-sharing social networking platform. 

Though the TikTok investment looks to be far out of relevance to Walmart, this could be one of the crucial deals the company has signed in recent times. While the concept of expedited delivery within e-commerce today has largely been about hastening last-mile operations, data-based predictive analytics over consumer trends will play a significant role in determining future market leaders. 

TikTok is a data gold mine on current trends, and Walmart realizes that. The idea is simple — monitor rising digital trends within the TikTok platform, predict future demand across specific product lines and make better inventory-related decisions based on expected demand. TikTok, with its 100 million-strong user base, also helps Walmart tap into the teen and young adult population segment.

Predicting future demands and aligning inventories and last-mile delivery operations to those trends will help Walmart reach its customers before everyone else and result in substantial bottom-line savings. Walmart also has a considerable advantage over Amazon in the last-mile segment in terms of strategic placement of its stores, as 90% of Americans live within 10 miles of a Walmart store. 

Another interesting way to monetize the TikTok platform is by creating a real-time marketplace. Walmart can look to push products over TikTok videos by showing users different products they could buy based on the video they watch. For instance, if there’s a guy with a polka-dotted shirt on a video, Walmart could direct interested users to buy a similar shirt from its store with the click of a button. 

Amazon has raked in sizable profits from advertisements on its platform, gaining roughly $14 billion last year. As TikTok continues to grow its user base, Walmart can look to bring in more revenue via advertisements — something long missing in its arsenal.

With TikTok, Walmart possesses a strategic advantage over most major retail players, as it has its hands dipped in the trifecta of physical retail, online retail and now social media. The sandwiching of these segments over one another could give rise to new-age fulfillment models — and in that context, Walmart is well-positioned to usher in the future of e-commerce.


More from Vishnu Rajamanickam
Augmented reality could solve unskilled labor problem in warehouses
Better safety systems could help fleets avoid nuclear verdicts
Last-mile logistics businesses could be next billion-dollar startups