{"id":19320,"date":"2016-11-18T16:37:12","date_gmt":"2016-11-18T21:37:12","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/digitization-at-walmart\/"},"modified":"2016-11-18T16:37:12","modified_gmt":"2016-11-18T21:37:12","slug":"digitization-at-walmart","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/digitization-at-walmart\/","title":{"rendered":"Digitization at Walmart"},"content":{"rendered":"<p><strong>Introduction<\/strong><\/p>\n<p>It is hard to think of an industry or company that hasn\u2019t been shaped by digitization and the Internet of Things (IoT) movement. In retail, the\u00a0IoT\u00a0offers opportunities in three critical areas: customer experience, the supply chain, and new channels and revenue streams [1].<\/p>\n<p>Digital from its inception, Amazon has crushed many traditional retailers online.\u00a0Wal-mart, determined to avoid this fate, has poured $ billions into its digital transformation effort, which has included over 3500 new hires and 15 acquisitions [1].<\/p>\n<p>Walmart\u00a0today is the second largest online retailer in the US behind Amazon [2], with online sales of $14bn last year, about one-sixth Amazon\u2019s [3], but there are opportunities for further business\/operating model transformations via digitization.<\/p>\n<p>&nbsp;<\/p>\n<p><strong>How Walmart is using digital technology to develop its business model and organizational model<\/strong><\/p>\n<p>Walmart is leveraging digital technology in diverse ways:<\/p>\n<ul>\n<li>Establishing leadership in online retail:\n<ul>\n<li>Aggressive expansion of online offers to compete with e-commerce giants e-Bay and Amazon. com now sells 15 million different types of items, with an expansion rate of 1 million items per month [2].<\/li>\n<li>Introduction of Prime-like membership program called \u201cShippingPass\u201d, which offers a two-day rapid delivery service that is supported by several giant \u201cOnline Fulfilment Centre\u201d warehouses around the country.<\/li>\n<li>Expansion of the free curbside pick-up service for groceries purchased online. The pick-up service is available in 400 stores in 60 markets.<\/li>\n<li>Adoption in 2012 of a top-of-the-range search engine &#8211; \u201cPolaris\u201d \u2013 which provides personalized recommendations to customers. In the year after it was launched, Polaris increased online sales conversions by 20% [3].<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<ul>\n<li>Using technology to enhance the in-store experience:\n<ul>\n<li>Relative to peers, Walmart has been more creative in maximizing app use for in-store customers leading to mobile devices generating 50 percent of Walmart. com traffic in the US [1]. The Walmart Pay app was recently expanded to reach all 4,600 US stores and features include:\n<ul>\n<li>Sensing when a customer enters a physical store and facilitating browsing of the store\u2019s ads and offers, and helping with item locations<\/li>\n<li>Allowing customers to create shopping lists, use digital coupons, and adding up the total cost of their shopping in real-time<\/li>\n<li>Price-matching of purchased items<\/li>\n<\/ul>\n<\/li>\n<li>Like many retailers, Walmart has made extensive use of Big Data to personalize its interaction with customers, drawing insights from analyses data on purchasing behaviour, search histories and web interactions.<\/li>\n<li>Walmart recently secured a patent for a self-driving shopping cart.The shopping carts could assist customers to navigate and find items on their shopping lists [4].<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<ul>\n<li>Improving store and stockroom efficiency\n<ul>\n<li>Walmart has increasingly relied upon RFID technology to improve inventory management and to track individual items more efficiently than can be done with bar codes [5]. RFID can be used to create \u201csmart shelves\u201d which automatically alert staff when items are low in stock. Research estimates that Walmart has been able to reduce its out-of-stock inventory by up to 16% by introducing technologies like RFID into its supply chain [1].<\/li>\n<li>Walmart recently announced it was six to nine months away from using drones to track inventories in its warehouses, with jobs of quality-assurance employees on the line [4].<\/li>\n<li>Walmart is currently building one of the biggest private clouds, which would host data from its 11,000 stores and is expected to make 40 petabyte of data available every day [1].<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<ul>\n<li>Developing organizational expertise in digital innovation\n<ul>\n<li>Formed in May 2011, @WalmartLabs is an idea hub aimed to generate innovative ideas for improving customers\u2019 online and in-store shopping experience. Several of the digital transformation initiatives listed here were proposed and developed by the @WalmartLabs team.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p><strong>Additional steps that Walmart should consider implementing<\/strong><\/p>\n<p>&nbsp;<\/p>\n<p><a href=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/Walmart.png\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone wp-image-19226\" src=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/Walmart-240x300.png\" alt=\"walmart\" width=\"775\" height=\"968\" srcset=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/Walmart-240x300.png 240w, https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2016\/11\/Walmart-480x600.png 480w\" sizes=\"auto, (max-width: 775px) 100vw, 775px\" \/><\/a><\/p>\n<p>&nbsp;<\/p>\n<p><em>Source: Accenture (2015), \u2018The Internet of Things: Revolutionizing the Retail Industry\u2019<\/em><\/p>\n<p>In the rapidly-developing field of digital transformation, Walmart cannot be complacent.\u00a0 The diagram above includes some additional initiatives\u00a0that Walmart could develop. Specific initiatives include:<\/p>\n<ul>\n<li>Smart Mirrors: a number of fashion retailers such as Macy\u2019s, Topshop and Nordstrom are experimenting with smart mirrors that enable customers to alter the dressing room lighting; virtually try on items; or see whole outfits that could complement a particular garment [6].<\/li>\n<\/ul>\n<ul>\n<li>Robots are likely to play an increasing role in retailers\u2019 manual operation of stores. Following the \u201csmart carts\u201d trial, Walmart should evaluate further ways to reduce costs through in-store robots.<\/li>\n<\/ul>\n<ul>\n<li>Smart price tags: Some retailers are considering shelf-edge tags that can identify customers by their mobile phone, and can reduce prices for those with loyalty cards or certain logged past purchases [7]. They can also be used to alter prices based on demand e.g. instantly reducing prices at non-peak hours or when items are approaching their Best Before date<\/li>\n<\/ul>\n<ul>\n<li>Smart packaging uses technology to help control and detect changes in the storage environment, and trace product history [8].<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p>Word Count: 799<\/p>\n<p>&nbsp;<\/p>\n<p><strong>References:<\/strong><\/p>\n<p>[1] \u201cWalmart: Where digital meets physical\u201d; Capgemini Consulting, 2015. Available at <a href=\"https:\/\/www.capgemini-consulting.com\/resource-file-access\/resource\/pdf\/walmart_pov_15_7_2015.pdf\">https:\/\/www.capgemini-consulting.com\/resource-file-access\/resource\/pdf\/walmart_pov_15_7_2015.pdf<\/a><\/p>\n<p>[2] \u201cHere is how Walmart is reigniting its e-commerce growth\u201d; Fortune Magazine, 2016. Available at <a href=\"http:\/\/fortune.com\/2016\/08\/18\/walmart-ecommerce-2\/\">http:\/\/fortune.com\/2016\/08\/18\/walmart-ecommerce-2\/<\/a><\/p>\n<p>[3] \u201cWalmart revamps e-commerce technology as Amazon applies pressure\u201d; The Wall Street Journal, 2016. Available at <a href=\"http:\/\/blogs.wsj.com\/cio\/2015\/11\/25\/wal-mart-revamps-e-commerce-technology-as-amazon-applies-pressure\/\">http:\/\/blogs.wsj.com\/cio\/2015\/11\/25\/wal-mart-revamps-e-commerce-technology-as-amazon-applies-pressure\/<\/a><\/p>\n<p>[4] \u201cWalmart\u2019s self-driving shopping cart is a new frontier for the Internet of Things\u201d; Business Insider, 2016. Available at <a href=\"http:\/\/www.businessinsider.com\/walmarts-self-driving-shopping-cart-is-a-new-frontier-for-the-internet-of-things-2016-9\">http:\/\/www.businessinsider.com\/walmarts-self-driving-shopping-cart-is-a-new-frontier-for-the-internet-of-things-2016-9<\/a><\/p>\n<p>[5] \u201cRFID Technology Boosts Walmart\u2019s Supply Chain Management\u201d; University of San Francisco, 2016. Available at <a href=\"http:\/\/www.usanfranonline.com\/resources\/supply-chain-management\/rfid-technology-boosts-walmarts-supply-chain-management\/#.WC9p8Y-cE2x\">http:\/\/www.usanfranonline.com\/resources\/supply-chain-management\/rfid-technology-boosts-walmarts-supply-chain-management\/#.WC9p8Y-cE2x<\/a><\/p>\n<p>[6] http:\/\/www.sachsinsights.com\/the-power-of-the-small-innovation-macys-dressing-room; <a href=\"http:\/\/tech.co\/smart-fitting-room-future-retail-2015-12\">http:\/\/tech.co\/smart-fitting-room-future-retail-2015-12<\/a> ; <a href=\"http:\/\/www.cbsnews.com\/news\/how-smart-mirrors-are-boosting-clothing-sales\/\">http:\/\/www.cbsnews.com\/news\/how-smart-mirrors-are-boosting-clothing-sales\/<\/a><\/p>\n<p>[7] \u201cDIY Chain Tests Variable Pricing\u201d; RetailWire, 2013. Available at <a href=\"http:\/\/www.retailwire.com\/discussion\/diy-chain-tests-variable-pricing\/\">http:\/\/www.retailwire.com\/discussion\/diy-chain-tests-variable-pricing\/<\/a><\/p>\n<p>[8] Park, Y.W., Kim, S.M., Lee, J.Y. et al. Application of biosensors in smart packaging. <em>Molecular &amp; Cellular Toxicology<\/em>. (2015) 11: 277. <a href=\"http:\/\/link.springer.com\/article\/10.1007\/s13273-015-0027-1\">http:\/\/link.springer.com\/article\/10.1007\/s13273-015-0027-1<\/a> ; <a href=\"http:\/\/www.forbes.com\/sites\/moorinsights\/2015\/10\/01\/what-does-food-packaging-have-to-do-with-big-data-and-the-internet-of-things\/#770c91d378a4\">http:\/\/www.forbes.com\/sites\/moorinsights\/2015\/10\/01\/what-does-food-packaging-have-to-do-with-big-data-and-the-internet-of-things\/#770c91d378a4<\/a><\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Can you think of any company or industry that hasn&#039;t been transformed &#8211; for better or for worse &#8211; by digitization? Let&#039;s see how Walmart has managed&#8230;<\/p>\n","protected":false},"author":2442,"featured_media":19345,"comment_status":"open","ping_status":"closed","template":"","categories":[1036,2167,1417,638,637],"class_list":["post-19320","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-digital-retail","category-e-retail","category-food-retail","category-retail-giant","category-walmart"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/digitization-challenge-2016\/","yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Digitization at Walmart - Technology and Operations Management<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/digitization-at-walmart\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Digitization at Walmart - Technology and Operations Management\" \/>\n<meta property=\"og:description\" content=\"Can you think of any company or industry that hasn&#039;t been transformed - for better or for worse - by digitization? 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