We all know Walmart, the American multinational retail corporation, especially if you have been to the US. The immensity of the store, the feeling you get when you are inside and see products ranging from toys, to laundry detergents to guns. When I was a kid it felt like a day out, I was fascinated by all the different products they offer. You can surely say that there is something for everyone. Being there physically and enjoying the vast amount of area you can cover is a great experience.
Walmart is a family-owned business, headquartered in Betonville, Arkansas, and is controlled by the Walton family. It is the largest grocery retailer in the US. Walmart extended operations overseas. Operations were successful in the United Kingdom, South America, China and Canada whereas operations in Germany and South Korea failed.
Sam Walton, the founder of Walmart said the following “The secret of successful retailing is to give your customers what they want. And really, if you think about it from your point of view as a customer, you want everything: a wide assortment of good-quality merchandise; the lowest possible prices; guaranteed satisfaction with what you buy; friendly, knowledgeable service; convenient hours; free parking; a pleasant shopping experience.” This statement describes exactly how I experienced Walmart in the past.
Walmart wants to change its course by spending more on e-commerce while slowing down on opening new stores. The reason why they are doing this is to catch up with Amazon and thus become a more significant competitor. CEO of Walmart, Doug McMillon, said that the company will look more like an e-commerce company in the future. Walmart made a serious start with this by closing a 3.3 billion dollar purchase for Jet.com, an online retail startup, and it also doubled the investment in JD.com, the 2nd biggest e-commerce player in China.
Walmart has weaknesses that it needs to attend to in order to compete with their biggest competitor, Amazon. Walmart needs to expand their warehouses or increase the quantity owned. They should also be looking for ways to reduce shipping costs, this can be accomplished by working with Jet.
E-commerce has many advantages to organizations, consumers and society, many to which I agree. For me personally, I would prefer going to an actual store where you actually have a feel of products. The experience of going to Walmart and looking around, even though you are not looking for something specifically, is great and will be lost if you shop online. That is why I will always be a fervent supporter of shopping in actual stores.
Dear Kyona, thank you for your blog! While I have only been to Walmart a few times myself, I think a lot of people can relate to your blog, and everybody seems to know (even in europe) what Walmart is and how their stores work. While I do believe Walmart’s strenght lies in having its own, big stores, I also understand why they want to go along with the trend and focus on e-commerce. If they don’t do so now, they might start lagging behind and losing market share, or be disrupted by other companies. I think by focussing on both stores and e-commerce, they can satisfy more customers, and in that way keep a wide product range for lower prices. Of course, what is crucial in this process (in my opinion) is the integration of offline and online retail. If they implement this multi-channel strategy smartly, it can use its 4600+ stores to offer same day delivery, returns in store, pickup in store and shipping, which can provide them with huge advantages. The articles below might be nice to read, as they talk about how Walmart e-commerce grows, and why it would be able to dominate.
https://www.cnet.com/news/walmart-ecommerce-jet-amazon/
http://fortune.com/2016/05/20/the-silver-lining-in-walmarts-slowing-e-commerce-growth/
http://fortune.com/2016/08/18/walmart-ecommerce-2/
http://www.forbes.com/sites/walterloeb/2016/08/19/why-walmart-will-dominate-in-e-commerce-like-it-does-in-bricks-and-mortar/#54a355694aca
Hello Kyona,
thank you for the interesting post. In my point of view, Walmart will gain a strategic advantage by its new purchase. Jet is one of the most innovative and fast growing e-commerce in the US, with a growing customer base, and the technical and logistical knowledge that will help Walmart to take on Amazon. In fact, the rise of Amazon’s market cap against Walmart made the need to act urgent and i believe this acquisition will help the company to grow faster. I see your points about in-store experience, and i feel the same, but it is a fact that retail business shifts online and traditional retailers have difficulties. Although they spend money and time to transform their brick-and-mortar businesses for the online shopper, Amazon and other startups still hold the lead. Charlie O’ Shea, the lead retail analyst for Moody’s said that “We see this as a race for second. Amazon lead is so great that it’s going to be virtually impossible to catch them, but you can compete with them”.
Sources:
http://news.walmart.com/2016/08/08/walmart-agrees-to-acquire-jetcom-one-of-the-fastest-growing-e-commerce-companies-in-the-us
http://www.nytimes.com/2016/08/09/business/dealbook/walmart-jet-com.html?_r=0
Hello Kyona,
This topic is really worth to discuss a bit more. Nowadays, every company is looking to take apart in E-commerce that seems like a social phenomenon. Walmart surely will seize this opportunity to shift its business to another stage. They enter the market by acquired Jet.com because of two reasons. First, Jet has a great reputation and brand value, which is able to attract 400,000 new customers per month, and the majority of Jet’s customers are young and digital savvy. Another reason of the acquisition is Jet’s capability and ambitious, Jet sets itself the goal to undercut Amazon in prices, Jet uses unique pricing software that shows different prices to different consumers, an outstanding pricing system is a fundamental part of the deal for Walmart.
Comes to Amazon, the competition between the two companies is inevitable, but could Walmart can hold off the E-commerce giant is the question. Recent report indicated that Walmart (WMT) has been growing faster than the overall e-commerce market. Its growth rate is expected to trump Amazon’s (AMZN) growth rate. This figure indeed shows Walmart’s promising performance in E-commerce despite Amazon is six times over Walmart size. However, I personally do not think Walmart has any chance to become a giant like Amazon in E-commerce. Firstly, as you mentioned the core business of Walmart is physical stores where e-commerce is everything for Amazon, with this singular focus, they have developed all their expertise in full support of e-commerce; this means Amazon is a way ahead of Walmart in E-commerce technology. Agility is the other reason, Walmart has an enormous and growing network of brick and mortar outlets, and they are a long ways on being able to put all the products on-line. For me, Walmart goes to e-commerce really just something like go with the stream.
http://www.sparkoptimus.com/blog/shopping-in-e-commerce-land-three-reasons-why-walmart-acquired-jet-com/
http://finance.yahoo.com/news/why-walmart-advantage-e-commerce-170638935.html
http://digitalsparkmarketing.com/walmart-ecommerce-strategy/