{"id":22725,"date":"2017-11-14T19:18:25","date_gmt":"2017-11-15T00:18:25","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/why-wal-mart-will-beat-amazon-in-e-commerce\/"},"modified":"2017-11-14T19:30:04","modified_gmt":"2017-11-15T00:30:04","slug":"why-wal-mart-will-beat-amazon-in-e-commerce","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/why-wal-mart-will-beat-amazon-in-e-commerce\/","title":{"rendered":"Why Wal-Mart will Beat Amazon in E-Commerce"},"content":{"rendered":"<p>An aspect of digitalization is that the modern consumer increasingly values being able to shop online rather than brick and mortar retail.<\/p>\n<p>For decades, Wal-Mart was America\u2019s retailer. As you all know, much of this changed when Amazon came on the scene. Many might say that Amazon will be the clear long-term winner due to its head start in the e-commerce space. While Amazon recently became profitable for the first time in its history, I think WMT will be the long term winner \u2013 the first major organization to make e-commerce profitable at the largest scale.<\/p>\n<p>Over the past several years, while many retailers have chosen to simply place their own businesses online through a \u201cdot com\u201d presence (e.g. nordstrom.com, macys.com, etc.), Wal-Mart has responded to Amazon in a much bigger way. Here\u2019s a brief timeline of actions they\u2019ve taken in the past year or so:<\/p>\n<ul>\n<li>Sep 2016 \u2013 WMT acquires Jet.com, an e-commerce site, for ~$3 bil. Its CEO, Marc Lore, is hired as Wal-Mart\u2019s Head of E-Commerce<a href=\"#_ftn1\" name=\"_ftnref1\">[1]<\/a><\/li>\n<li>Mar 2017 \u2013 Wal-Mart acquires ModCloth, a trendy women\u2019s fashion brand that sells through the e-commerce channel<\/li>\n<li>Jun 2017 \u2013 Wal-Mart begins testing a program in which its 1.4 million retail associates would deliver products to customers homes after hours<\/li>\n<li>Jun 2017 \u2013 Bonobos, a trendy men\u2019s e-commerce fashion brand, is acquired. Public uproar gains media traction as loyal Bonobos and ModCloth consumers claim their brands have \u201csold out\u201d to corporate giant WMT<a href=\"#_ftn2\" name=\"_ftnref2\">[2]<\/a><\/li>\n<li>Sep 2017 \u2013 1,000<sup>th<\/sup> online grocery location opened in the U.S. \u2013 the service enables customers to order groceries online, and pick up from a Wal-Mart store without leaving their car. Also, WMT remodels its 500<sup>th<\/sup> store with the goal of i) faster checkout times and ii) more warehouse space to enable e-commerce deliveries<\/li>\n<li>Oct 2017 \u2013 Wal-Mart announces Mobile Express Returns (returning an item now takes 30 seconds in store vs. 5 min before this program)<a href=\"#_ftn3\" name=\"_ftnref3\">[3]<\/a><\/li>\n<\/ul>\n<p>In addition to actions they\u2019ve already taken, Wal-Mart\u2019s strategy to compete with Amazon going forward consists of 2 key components:<\/p>\n<ol>\n<li>Leverage its existing physical and human assets \u2013 90% of the U.S. population lives within a 15-minute drive of a Wal-Mart store and Wal-Mart has 1.4 million retail store employees.<a href=\"#_ftn4\" name=\"_ftnref4\">[4]<\/a> WMT is uniquely positioned to be both online and in-store \u2013 wherever the consumer happens to be at their time of purchase.<\/li>\n<li>Focus on Grocery \u2013 Amazon\u2019s biggest struggles have occurred in the \u201clast-mile\u201d of their supply chain. As the U.S.\u2019s largest grocer Wal-Mart is uniquely positioned to get groceries to a consumer\u2019s home more quickly and cheaply than Amazon.<a href=\"#_ftn5\" name=\"_ftnref5\">[5]<\/a><\/li>\n<\/ol>\n<p>In my view, in addition to the above, management should focus on two key things.<\/p>\n<p>First, Wal-Mart should be incentivizing online purchasing. Its consumers value it \u2013 42% of Amazon Prime customers also shop at Wal-Mart.<a href=\"#_ftn6\" name=\"_ftnref6\">[6]<\/a> Despite this, Wal-Mart deliberately makes products cheaper to pick up in store than to deliver.<a href=\"#_ftn7\" name=\"_ftnref7\">[7]<\/a> I believe this is short sighted. While this optimizes profit for that purchase, each in-store pickup is a missed opportunity to show the consumer how Wal-Mart can deliver seamlessly.<\/p>\n<p>The second is that Wal-Mart is a retail company, while Amazon is a technology company. In today\u2019s job market, top engineers would rather work at Amazon than Wal-Mart. How will management make it cool to work at Wal-Mart?<\/p>\n<p>Still, however the bottom line is this. Wal-Mart already has the distribution network. It\u2019s much easier for Walmart to fix its consumer experience and stodgy brand reputation than it is for Amazon to acquire 4,600 fulfillment centers and 1.4 million employees throughout the U.S.<\/p>\n<p>But what about where Amazon already has a foothold? Should Wal-Mart even try to take Amazon market share in the U.S.\u2019s coastal urban areas, and if so, should they try to do so organically, or through acquisition (should they acquire Target?)?<\/p>\n<p>[760 Words]<\/p>\n<p><a href=\"#_ftnref1\" name=\"_ftn1\">[1]<\/a> \u201cForget about antitrust: Wal-mart is punching back at amazon.\u201d (2017, Oct 10). Investor&#8217;s Business Daily<\/p>\n<p><a href=\"#_ftnref2\" name=\"_ftn2\">[2]<\/a> Cheng, Nicholas. \u201cWal-Mart Is Buying Trendy e-Commerce Sites. The Cool Kids Are Not Having It.\u201d <em>Los Angeles Times<\/em>, 17 Aug. 2017<\/p>\n<p><a href=\"#_ftnref3\" name=\"_ftn3\">[3]<\/a> Thomas, Lauren. \u201cWal-Mart Promises 30-Second Returns in Stores, as Amazon Tries to Catch Up.\u201d <em>CNBC<\/em>, cnbc.com, 9 Oct. 2017<\/p>\n<p><a href=\"#_ftnref4\" name=\"_ftn4\">[4]<\/a> Dua, Tanya. \u201cThe Founder of Jet.com Explains Walmart&#8217;s Strategy to Beat Amazon.\u201d Business Insider, Business Insider, 27 Sept. 2017<\/p>\n<p><a href=\"#_ftnref5\" name=\"_ftn5\">[5]<\/a> Lim, S. F. W. T., Wang, L., &amp; Srai, J. S. (2017). \u201cWal-mart&#8217;s omni-channel synergy.\u201d Supply Chain Management Review, 21(5), 30-37.<\/p>\n<p><a href=\"#_ftnref6\" name=\"_ftn6\">[6]<\/a> Chen, Oliver, CFA. \u201cHow Do You Make Wal-Mart Great Again in the Age of Amazon?\u201d Cowen &amp; Company Equity Research, 10 October 2016<\/p>\n<p><a href=\"#_ftnref7\" name=\"_ftn7\">[7]<\/a> LaVito, Angelica. \u201cWal-Mart Raising Prices Online Shows the Difference between It and Amazon, Strategists Say.\u201d CNBC, CNBC, 13 Nov. 2017<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Why Wal-Mart&#039;s physical footprint and employee base will allow it to beat Amazon in e-commerce over the long term<\/p>\n","protected":false},"author":9960,"featured_media":22745,"comment_status":"open","ping_status":"closed","template":"","categories":[52,3212,2123,49,515,3535],"class_list":["post-22725","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-amazon","category-amazon-prime","category-digitalization","category-e-commerce","category-pooled-logistics","category-wmt","hck-taxonomy-organization-walmart","hck-taxonomy-industry-retail","hck-taxonomy-country-united-states"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/rc-tom-challenge-2017\/","yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - 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