Why would TikTok sell to Walmart

So Walmart is joining the bid for TikTok’s US business, which is forced to sell or shut by Donald Trump. Allegedly it is teaming up with Microsoft against other bidders including Oracle.

It was a bit of surprise but the move does make a lot of sense. Getting access to dozens of millions of young audience, plus hundreds of thousands of influencers, would give Walmart’s ecommerce business a huge boost.

It seems all the commentators have realised that:

However, very few asked the question – why would ByteDance, the company that owns TikTok to Walmart?

We thought this deal will make a lot of sense for ByteDance too.

Douyin, TikTok’s Chinese domestic counterpart, has been making incursions into ‘livestreaming’ ecommerce. Globally, it probably does not want to waste the opportunity to do the same – especially when its competitor Facebook is putting a lot of focus on the same.

The development of ecommerce would also supplement TikTok’s advertising revenue stream, which might be limited in emerging markets. Without resources or capabilities, Walmart would make a great partner.

It can’t partner with Alibaba or Tencent, both seeing TikTok as a great threat.

So the deal with Walmart could, ideally, be structured as Walmart making a strategic investment into ByteDance, and in return gets the right to operate TikTok in the US and a few other developed markets.

Win-win indeed.