If you want to win in the 21st century digital economy, you must control or influence demand, not supply. In the industrial age economy, power went to gatekeepers of supply. Today, the empire builders are those that control demand. This is possible because digital supply is unbounded and unconstrained, making it largely not a factor.
If Walmart buys TikTok, it will get demand (users) – about 100 million Americans. Those users can be monetized over time. The reason why Facebook can wake up and enter into shopping, payment, etc is because it controls demand. TikTok will give Walmart demand which is very important in 21st century digital commerce. The most important feature in Facebook is this: people. Walmart needs an ecosystem where there are people, irrespective of whatever it wants to sell. TikTok offers a roadmap to that – and that explains why this move should not be confusing as we watch the world’s largest retailer enter a heated fray for a short video app. It needs those users to battle Amazon which is already a natural app for shoppers with its own demand!
TikTok recently said more than 100 million Americans use TikTok monthly. That’s 100 million more people who would be exposed to Walmart’s products and those of third-party sellers with which it works.
Walmart’s online business, which generated $24.5 billion last year, accounted for about 5% of its overall sales. Joe Feldman, analyst at investment banking firm Telsey Advisory Group, said Walmart’s online revenue is expected to increase to $35 billion this year.
TikTok’s owner is already pushing for more e-commerce on TikTok and Douyin, the Chinese version of TikTok. Walmart could continue that effort in addition to marketing its products on the service.
With the help of tech giant Microsoft, Walmart could also become a major force in online ad sales by selling ad inventory on TikTok. Walmart already sells ads on Walmart.com.
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