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\nWalmart is in a dire situation. By all estimates, Amazon\u2019s retail sales are soon going to catch-up or at least rival it\u2019s.\u00a0<\/span>The answer here is growing its own online revenue and Walmart management agrees. At a recent investor meeting, executives announced a focus on e-commerce to drive growth [1].<\/span><\/p>\n
However, customer demands have changed.\u00a0<\/span>A quote by Stephenie Landry, head of Amazon\u2019s Prime Now program comes to mind: \u201cTen years ago, people thought two-day shipping seemed really fast; now we think two-hour shipping and one-hour shipping will be the standard\u201d [2]. Also, apps like Uber and Instacart have changed customer expectations in terms of delivery.<\/span><\/p>\n Furthermore, online demand is spiky and requires infrastructure built for peak conditions [3]. Traditional retail infrastructure isn\u2019t built to handle these spikes, but rather does well with stable, consistent, demand [Ibid].\u00a0<\/span>The key to the castle here is faster, responsive delivery through digitization of the supply chain – a feat Amazon achieved years ago.<\/span><\/p>\n For the mid-term, Walmart is focused on solving deeper problems using a two-pronged strategy: bringing on relevant talent in the digital space and building new distribution centers. <\/span><\/p>\n For instance, Marc Lore, a tech executive, is well-known in tech circles for his e-commerce expertise and selling Quidsy (an e-commerce site for diapers) to Amazon in 2011 for $545M [5]. He has been brought under the fold of Walmart and named CEO of eCommerce to spearhead the new digital strategy [Ibid].<\/span><\/p>\n Walmart is also investing in distribution centers so as to deliver goods to consumers across the country faster [6]. These new facilities are \u201cmore than 1 million square feet and hold at least 500,000 items\u2014much larger than its traditional distribution centers for stores, which hold 30,000 to 50,000 items\u201d [Ibid] to offer a wider selection to consumers [Ibid]. \u201cThese new buildings…use both human labor and automation, such as computer-controlled chutes, to move items [Ibid]. The new centers will be part of a network for filling online orders that includes traditional buildings, plus 11 existing smaller e-commerce centers and 83 Wal-Mart Supercenters that have been designated \u2018ship-from-store\u2019 locations. [Ibid].\u201d<\/span> The goal for Walmart however shouldn\u2019t be band-aids but rather to build an organization that can compete in the short-term by further investing in advanced technology in fulfillment centers and mid-term by creating a culture that rivals Amazon\u2019s culture of experimentation. <\/span><\/p>\n Walmart needs to invest in core technology such as artificial intelligence and robotics, not just better information systems. After Amazon acquired Kiva Robotics (a startup to replace warehouse workers with robots) in 2012, it immediately stopped other retailers from using Kiva\u2019s products and built robotics-driven logistics systems internally [8]. Today, there are better products than Kiva that Walmart can deploy internally to optimize warehouses i.e. Locus Robotics\u2019s fleet of robots to ferry goods across the warehouse or Fetch Robotics\u2019s pick and pack systems to replace human workers [Ibid]. Walmart needs to be able to deploy these types of technologies consistently to build efficient fulfillment centers.<\/span><\/p>\n Furthermore, Walmart has been a successful high-volume discount retailer by creating a culture of operational efficiency. However, it noticeably lacks a culture of innovation by experimentation through failure.<\/span><\/p>\n A quote by Jeff Bezos comes to mind: \u201cI\u2019ve made billions of dollars of failures at Amazon.com,\u201d he said. \u201cLiterally billions. \u2026 Companies that don\u2019t embrace failure and continue to experiment eventually get in the desperate position where the only thing they can do is make a Hail Mary bet at the end of their corporate existence.\u201d [9]<\/span><\/p>\n These experiments allow Amazon to continue innovating for customers with programs like Prime Now. To answer, Walmart needs to create a culture that does the same.<\/span><\/p>\n Word Count: 791<\/em><\/p>\n [1<\/a>] Hufford, A. (2017). <\/span>Wal-Mart reveals financial goals, e-commerce focus<\/span><\/i>. [online] MarketWatch. Available at: https:\/\/www.marketwatch.com\/story\/wal-mart-reveals-financial-goals-e-commerce-focus-2017-10-10 [Accessed 15 Nov. 2017].<\/span><\/p>\n [2<\/a>] Ivonye, K. (2017). <\/span>How Walmart, Amazon, Target and others are coming up with new ways of getting more stuff to you faster<\/span><\/i>. [online] Recode. Available at: https:\/\/www.recode.net\/2017\/10\/13\/16392676\/ecommerce-delivery-dominance-amazon-alibaba-last-mile-pickup-kiosk-locker [Accessed 15 Nov. 2017].<\/span><\/p>\n [3<\/a>] McCandless, J. (2016). 3 Ways to Handle Ecommerce Peak Season Demand. [Blog] <\/span>MultiChannelMerchant<\/span><\/i>. Available at: http:\/\/multichannelmerchant.com\/blog\/3-ways-handle-ecommerce-peak-season-demand\/ [Accessed 15 Nov. 2017].<\/span><\/p>\n [4<\/a>] Staff, T. (2017). <\/span>6 of Walmart’s Most Recent Acquisitions<\/span><\/i>. [online] TheStreet. Available at: https:\/\/www.thestreet.com\/video\/14048048\/5-of-walmart-s-most-recent-acquisitions.html [Accessed 15 Nov. 2017].<\/span><\/p>\n [5<\/a>] Catcher, T. (2017). <\/span>Marc Lore: The Man, The Myth, The Legend?<\/span><\/i>. [online] Seeking Alpha. Available at: https:\/\/seekingalpha.com\/article\/4085029-marc-lore-man-myth-legend [Accessed 15 Nov. 2017].<\/span><\/p>\n [6<\/a>] Nash, K. (2017). Wal-Mart Builds Supply Chain to Meet E-Commerce Demands. <\/span>Wall Street Journal<\/span><\/i>. [online] Available at: https:\/\/www.wsj.com\/articles\/wal-mart-builds-supply-chain-to-meet-e-commerce-demands-1431016708 [Accessed 15 Nov. 2017].<\/span><\/p>\n [7<\/a>] Hao, K. (2017). <\/span>Walmart hopes to patent a floating warehouse to send out drone deliveries from mid-air<\/span><\/i>. [online] Quartz. Available at: https:\/\/qz.com\/1058907\/walmart-following-amazon-filed-for-a-patent-to-send-out-delivery-drones-from-a-distribution-center-in-the-sky-wmt-amzn\/ [Accessed 15 Nov. 2017].<\/span><\/p>\n [8<\/a>] Tobe, F. (2017). <\/span>The technology gap left by Amazon’s acquisition of Kiva Systems – The Robot Report<\/span><\/i>. [online] The Robot Report. Available at: https:\/\/www.therobotreport.com\/the-technology-gap-left-by-amazons-acquisition-of-kiva-systems\/ [Accessed 15 Nov. 2017].<\/span><\/p>\n [9<\/a>] Griffith, E. (2014). <\/span>Amazon CEO on Fire phone flop: ‘I’ve made billions of dollars of failures’<\/span><\/i>. [online] Fortune. Available at: http:\/\/fortune.com\/2014\/12\/02\/amazon-ceo-jeff-bezos-failure\/ [Accessed 15 Nov. 2017].<\/span><\/p>\n Exhibits:<\/b><\/p>\n [i<\/a>] The Economist (2016). <\/span>Catching up<\/span><\/i>. [image] Available at: https:\/\/cdn.static-economist.com\/sites\/default\/files\/imagecache\/640-width\/images\/print-edition\/20160604_WBC571.png [Accessed 15 Nov. 2017].<\/span><\/p>\n [ii<\/a>] Yahoo Finance (2017). <\/span>Walmart online sales growth jumps<\/span><\/i>. [image] Available at: https:\/\/s.yimg.com\/ny\/api\/res\/1.2\/GC3gGdoyvpcWfVwnj0G8pA–\/YXBwaWQ9aGlnaGxhbmRlcjtzbT0xO3c9NzQ0O2g9NDE5\/http:\/\/media.zenfs.com\/en\/homerun\/feed_manager_auto_publish_494\/7a706d2047e1ce05cd232cefca11cb83 [Accessed 15 Nov. 2017].<\/span><\/p>\nAcquisitions, talent and fulfillment centers<\/b><\/h3>\n
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\n<\/span>The goal of these distribution centers is to serve a wider selection across the country quicker [Ibid], thus eventually competing with Amazon\u2019s delivery times.\u00a0<\/span>Lastly, Walmart\u2019s goal also involves some experimentation in newer ways of delivery that might be faster in the future i.e. drones. For instance, \u201ca patent application filed by Walmart…proposes an \u2018aerial transport and launch system\u2019 for dispatching delivery drones in mid-air.\u201d [7]<\/span><\/p>\nGoing the extra mile<\/b><\/h3>\n
Open questions that still persist:<\/b><\/h3>\n
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\nReferences<\/b><\/b><\/h3>\n
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