{"id":15898,"date":"2016-11-17T15:48:54","date_gmt":"2016-11-17T20:48:54","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/bricks-and-clicks-how-walmart-is-winning-with-digital-technology\/"},"modified":"2016-11-17T15:52:51","modified_gmt":"2016-11-17T20:52:51","slug":"bricks-and-clicks-how-walmart-is-winning-with-digital-technology","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/bricks-and-clicks-how-walmart-is-winning-with-digital-technology\/","title":{"rendered":"Bricks and Clicks: How Walmart is Winning with Digital Technology"},"content":{"rendered":"

When most people think of Walmart, they do not think of high technology. But the Bentonville behemoth has made major strides in the past ten years towards embracing digitization, and in 2015 topped the list of biggest technology spenders worldwide at $10.5B (6). Walmart has not only made eCommerce part of its business model, it has sought to thrive in this space through innovation and acquisitions. It has also enhanced the day-to-day operating model by investing in technologies that make the shopping experience more enjoyable. There is still room to improve, but overall Walmart has treated digitization as a major opportunity, using it to further the company tenet, \u201cSave Money, Live Better\u201d.<\/p>\n

BUSINESS MODEL CHANGES<\/strong><\/p>\n

Initially, the advent of eCommerce came as a threat to Walmart, which operates over 11,500 brick-and-mortar stores internationally (1). Walmart proactively addressed this challenge by entering the eCommerce space with Walmart.com in 2000 (1). Since then, the company has invested billions in its online operation but has trailed Amazon on every success metric (2). In 2015, Amazon posted more than seven times Walmart\u2019s $13.7B in online sales (4). Walmart\u2019s August 2016 acquisition of Jet for $3.3B signifies a renewed commitment to optimizing the online shopping experience as well as the behind-the-scenes logistics (3). The two companies will operate semi-autonomously, Walmart will benefit from Jet\u2019s proprietary technology in \u201cgain sharing\u201d, which encourages customers to buy more items at once to reduce supply chain and logistics costs. (3)<\/p>\n

OPERATING MODEL CHANGES<\/strong><\/p>\n

One major operating model shift that Walmart is experimenting with is online grocery shopping with is same-day pickup. This move is an attempt to take advantage of something Amazon does not have: a network of thousands of physical stores. Since 2015, Walmart has expanded this program from five stores to 80 across the U.S. (4) Though it may seem odd to order online only to drive to the store, customers seem to ascribe value to having their groceries packed and carried to the car.\u00a0 This unique intersection of new technology and traditional retail could only be achieved by Walmart, which has a location within 10 miles of 90% of Americans\u2019 homes (4).<\/p>\n

Another addition to the Walmart operating model is @WalmartLabs, an innovative group within Walmart with a mission \u201cto build products that seamlessly integrate the online and in-store shopping experiences for millions of customers\u201d (5). Heavily weighted with data scientists and engineers rather than retail specialists, it functions as an \u201cidea incubator\u201d focused on innovations that will better connect shoppers with Walmart in the future. So far, this Silicon Valley -based group has made use of cutting edge technology in two ways:<\/p>\n