{"id":22001,"date":"2017-11-14T17:25:13","date_gmt":"2017-11-14T22:25:13","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/an-end-to-the-walmart-era\/"},"modified":"2017-11-14T17:25:13","modified_gmt":"2017-11-14T22:25:13","slug":"an-end-to-the-walmart-era","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/an-end-to-the-walmart-era\/","title":{"rendered":"An End to the Walmart Era?"},"content":{"rendered":"

Can Walmart Dominate in the Digital Age? <\/u><\/strong><\/p>\n

Walmart is the biggest retailer with 10.6% US market share in 2016. It has been seeing steady growth but with increase in digitalization, consumers are shifting their behavior to online ecommerce as they seek for convenience and low costs. Ecommerce, especially Amazon, is posing a great threat to Walmart as it grows at 30% in 2015 (See figure below for Walmart versus Amazon market-share). This trend is also reflected in the rising figure of customers shopping at both Walmart and Amazon rising from 8% in 2014 to 12% in 2016.[1]<\/a> With this increase in competition can Walmart prove that as a traditional retailer they can dominate in the digital age?<\/strong><\/p>\n

\"\"<\/a><\/p>\n

Walmart\u2019s Integrated Retail Strategy <\/em><\/strong><\/p>\n

Walmart has leveraged the synergy between its physical stores (90% of Americans live within 10 miles of its stores[2]<\/a>), and its online store through an integrated retail strategy. This allows Walmart to increase customer convenience whilst maintaining low costs.<\/p>\n

In the short term, Walmart has transformed its physical stores into ecommerce fulfillment centers through programs such as the associate delivery program, in-store pick ups, and scan and go initiative.[3]<\/a> \u00a0These programs allow Walmart to reduce costs in its last mile of delivery. The associate delivery program encourages associates to drop off customers\u2019 orders during their commute to and from work. Online discount incentives for picking up orders in store or at curb pick up stations also help to reduce shipping costs for Walmart.<\/p>\n

The introduction of Walmart Pay allows customers to scan the products on-shelf, receive product information and pay through a mobile barcode at checkout. This integration of technology not only helps to increase customer convenience but also Walmart\u2019s customer behavior data collection. This allow Walmart to track customer behavior, create personalized experiences and improve inventory management and information flow across its supply chain system.<\/p>\n

In the medium term, Walmart has made several acquisitions to increase product assortment and build its army to fight Amazon. Its acquisition of jet.com and several other ecommerce platforms have increase customer assortment to 35 million which is four times the number of assortment they had four years ago but only a fraction of Amazon\u2019s[4]<\/a>. Through this Walmart is also able to acquire different customer and vendor profiles.\u00a0 Walmart has also acquired \u201cParcel,\u201d a delivery service which allows same day delivery in certain areas.\u00a0 \u00a0Partnerships with Google has also allowed Walmart to increase its data collection and online presence.<\/p>\n

Recommendations<\/strong><\/p>\n

With an increasingly fragmented customer base, in the short term I suggest that Walmart carry an analysis on the fundamental tradeoffs with each incremental cost of adding assortments and ensuring its availability. I would also recommend that Walmart focuses on its grocery segment as Walmart holds 21% of US grocery market share and only 33% of consumers shop grocery online.[5]<\/a>\u00a0 Amazon recent acquisition of Whole Foods, suggests its aggressive pursuit of this sector.<\/p>\n

With increase in low price competitors I question Walmart\u2019s ability to maintain its comparative advantage in this field. In the medium term, I recommend that Walmart work with suppliers to improve its entire supply chain. The supply chain is no longer a linear factory to store model but a consumer supply system where every location is a possible e-commerce distribution node.[6]<\/a> \u00a0To increase efficiency and productivity of the suppliers, Walmart may need to share information and improvement tactics, or send in Walmart\u2019s team to help improve their system.<\/p>\n

Walmart also needs to increase its brand loyalty and retention.\u00a0 According to the American Consumer Satisfaction Index, Walmart has the lowest shoppers\u2019 satisfaction among big retailers[7]<\/a>. Walmart will need to improve its shopping experience and connect with customers on a greater value proposition other than price. They should increase their sustainability efforts and corporate social responsibility. With increase in technology, maintaining trust is also crucial. Walmart should implement strategies to ensure transparency and prevention of price discrimination.<\/p>\n

Walmart also needs to find a way to integrate seamlessly into customers\u2019 lifestyle and make the shopping decision frictionless. Amazon has launched several initiatives such as Amazon Dash that allows customers to order items without accessing a phone or laptop and shopping straight from the cupboard.[8]<\/a> \u00a0\u00a0Walmart needs to find a way to do the same and be the top of mind and increase their customer retention.<\/p>\n

Questions?<\/em><\/strong><\/p>\n

Will Walmart be able to sustain the price-game or is this a downward spiral? Is the e-commerce landscape just a battle between convenience and assortment?<\/p>\n

 <\/p>\n

Word Count: <\/strong>738 words<\/em><\/p>\n

[1]<\/a>,[2]<\/a> Economist.com. (2017).\u00a0Thinking Outside the Box<\/i>. [online] Available at: https:\/\/www.economist.com\/news\/business\/21699961-american-shoppers-move-online-walmart-fights-defend-its-dominance-thinking-outside [Accessed 14 Nov. 2017].<\/span><\/p>\n

<\/a><\/p>\n

[3]<\/a>\u00a0Forbes.com. (2017).\u00a0Is Wal-Mart Prepared To Face The Amazon — Whole Foods Combination?<\/i>. [online] Available at: https:\/\/www.forbes.com\/sites\/greatspeculations\/2017\/06\/19\/is-wal-mart-prepared-to-face-the-amazon-whole-foods-combination\/#26e8d58c3c43 [Accessed 14 Nov. 2017].<\/span><\/p>\n

[4]<\/a>\u00a0Fortune. (2017).\u00a0What Walmart’s CEO Wants In an Acquisition<\/i>. [online] Available at: http:\/\/fortune.com\/2017\/03\/14\/walmart-tech-2\/ [Accessed 14 Nov. 2017].<\/span><\/p>\n

[5]<\/a>\u00a0Forbes.com. (2017).\u00a0Is Wal-Mart Prepared To Face The Amazon — Whole Foods Combination?<\/i>. [online] Available at: https:\/\/www.forbes.com\/sites\/greatspeculations\/2017\/06\/19\/is-wal-mart-prepared-to-face-the-amazon-whole-foods-combination\/#26e8d58c3c43 [Accessed 14 Nov. 2017].<\/p>\n

[6]<\/a>\u00a0Digital Commerce 360. (2017).\u00a0How e-commerce will change the grocery industry<\/i>. [online] Available at: https:\/\/www.digitalcommerce360.com\/2017\/02\/02\/how-e-commerce-will-change-grocery-industry\/ [Accessed 14 Nov. 2017].<\/span><\/p>\n

[7]<\/a>,\u00a0[8]<\/a> Economist.com. (2017).\u00a0Thinking Outside the Box<\/i>. [online] Available at: https:\/\/www.economist.com\/news\/business\/21699961-american-shoppers-move-online-walmart-fights-defend-its-dominance-thinking-outside [Accessed 14 Nov. 2017].<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

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