{"id":34975,"date":"2018-11-13T18:41:53","date_gmt":"2018-11-13T23:41:53","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/can-walmart-machine-learn-its-way-to-the-top\/"},"modified":"2018-11-13T18:41:53","modified_gmt":"2018-11-13T23:41:53","slug":"can-walmart-machine-learn-its-way-to-the-top","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/can-walmart-machine-learn-its-way-to-the-top\/","title":{"rendered":"Can Walmart Machine Learn its Way to the Top?"},"content":{"rendered":"

With Amazon anticipated to capture 50% of 2018\u2019s U.S. e-commerce market share, \u201cAmazon.com\u201d has become synonymous to \u201conline shopping.\u201d[i]<\/a> Perhaps more surprising is the next-closest e-commerce competitor, eBay, has 7% and Walmart, at 4th<\/sup> place, only commands 4%.[ii]<\/a> These statistics beg the question \u2013 can anyone catch Amazon?<\/p>\n

Walmart\u2019s mission is to \u201c[help] people around the world save money and live better\u201d.[iii]<\/a> Walmart offers customers value through achieving price leadership. Digital innovation is critical to Walmart\u2019s survival because with continued shifts to e-commerce, Walmart may find itself with a declining in-store customer base. During 2017 Black Friday week, U.S. retail in-store foot traffic declined 4% from 2016, while online sales increased 18%.[iv]<\/a> Management understands that to win online, \u201c[Walmart] needs to also win through logistics and supply chain.\u201d[v]<\/a> Walmart achieves price leadership through large-scale volume negotiating power with suppliers. However, if Walmart begins losing customers, then it will lose its negotiating power and ultimately, its low prices. It is crucial for Walmart to find ways to drive process improvement, win e-commerce customers, grow its customer volume, and continue to deliver on its promise.<\/p>\n

Machine learning enables Walmart to efficiently parse through and analyze its wealth of data driven by a weekly customer base of nearly 270 million customers across all 28 countries.[vi]<\/a> Walmart is able to drive process improvement through utilizing algorithms to predict preferences on product assortment, make personalized recommendations for individuals and better manage inventory levels.<\/p>\n

Beginning in 2016, Walmart began investing billions of dollars in growing its online platform through various acquisitions and strategic alliances, after realizing its organic e-commerce investments were not sufficient to compete with Amazon.[vii]<\/a> In August 2016, Walmart acquired Jet.com for $3.3 billion in a move that many viewed as \u201cdefensive\u201d and \u201creactionary\u201d to Amazon\u2019s accelerating share gains.[viii]<\/a> While the deal is viewed as a longer-term play for Walmart, gaining Jet.com\u2019s dynamic pricing technology and experienced team, there are meaningful short-term benefits. Walmart gained immediate access to a \u201cvaluable urban, young, affluent demographic\u201d that was vastly different than Walmart\u2019s existing lower-income customers.[ix]<\/a> Gaining 2 million new Jet.com customers\u2019 data and purchasing habits enabled Walmart to further feed its predictive algorithms.[x]<\/a> Combined with Jet.com\u2019s dynamic pricing algorithms, Walmart poised itself to further provide customers with broader product assortment at even lower prices.<\/p>\n

In May 2018, Walmart acquired Indian e-commerce site Flipkart for $16 billion.[xi]<\/a> This investment was the largest acquisition Walmart made in 20 years.[xii]<\/a> The deal rationale was simple \u2013 acquire an established e-commerce platform to grow customers and compete with Amazon. Like Jet.com, in the near term Flipkart provides Walmart access to a new customer base with an established e-commerce platform. In the longer-term, Flipkart\u2019s technology will enable Walmart to source e-commerce lessons from the Indian e-commerce arena and apply best practices and technological improvements to U.S. e-commerce.[xiii]<\/a> Sharing teachings across geographies drives process improvement on multiple fronts and could pass on additional savings to customers.<\/p>\n

Additionally, in July 2018, Walmart formed a five-year strategic partnership with Microsoft to further enhance its machine learning capabilities in the medium- to longer-term. The partnership helps Walmart \u201cto improve operational efficiency through the application of machine learning\u201d.[xiv]<\/a> Through leveraging Microsoft\u2019s artificial intelligence technology, Walmart will strive to improve website functionality, reduce in-store energy consumption and further strengthen its delivery systems, allowing Walmart to improve its process and continue in its price leadership position.[xv]<\/a><\/p>\n

While Walmart\u2019s foray into machine learning has been largely acquisitive, management could explore organically-developed avenues. Currently, Walmart does not yet have a system to link its online and in-store customers. Given the range of demographics (millennial Jet.com customers vs. lower-income in-store shoppers), establishing a program connecting omni-channel shoppers would provide valuable additional data for Walmart\u2019s algorithms to understand and predict purchasing habits. One recommendation would be a loyalty rewards program that enables tracking customers across various channels and further improve its algorithms, and provides additional cost savings to customers.<\/p>\n

Walmart\u2019s investments in machine learning and digital innovation are necessary steps in the ongoing battle to win online retail, or at least, to catch up to Amazon. Wall Street believes that if Walmart could attack Amazon in both price and assortment \u201con [Amazon\u2019s] home turf,\u201d then there is \u201ca real possibility that [Walmart] could disrupt Amazon\u2019s standing.\u201d[xvi]<\/a> The biggest question now is how Amazon will respond. Perhaps Amazon is not worried about its competitors. However, with a forward-thinking leader at its helm, no one would believe that Amazon is happy to concede market share it painstakingly won.<\/p>\n

Ultimately, the winner of this e-commerce war is the end customer.<\/p>\n

(Word count: 756)<\/p>\n

[i]<\/a> \u00a0\u00a0\u201cAmazon Now Has Nearly 50% of US Ecommerce Market,\u201d eMarketer Retail, https:\/\/retail.emarketer.com\/article\/amazon-now-has-nearly-50-of-us-ecommerce-market\/5b48c542ebd4000b24140992, accessed November 2018.<\/p>\n

[ii]<\/a> Ibid.<\/p>\n

[iii]<\/a> Walmart Inc., January 31, 2018 Form 10-K, https:\/\/www.sec.gov\/Archives\/edgar\/data\/104169\/000010416918000028\/wmtform10-kx1312018.htm, accessed November 2018.<\/p>\n

[iv]<\/a> Sarah Nassauer and Laura Stevens, \u201cInside the Wal-Mart vs. Amazon Battle Over Black Friday,\u201d The Wall Street Journal<\/em>, November 26, 2017, www.wsj.com, accessed November 2018.<\/p>\n

[v]<\/a> Oliver Chen et al., \u201cInvestor Day: An Intense Customer Focused Transformation, Reit. Outperform,\u201d Cowen and Company, October 6, 2016, p. 2, via Bloomberg, accessed November 2018.<\/p>\n

[vi]<\/a> Walmart Inc., January 31, 2018 Form 10-K, https:\/\/www.sec.gov\/Archives\/edgar\/data\/104169\/000010416918000028\/wmtform10-kx1312018.htm, accessed November 2018.<\/p>\n

[vii]<\/a> Simeon Gutman et al., \u201cIs Walmart Flying the Right Jet?\u201d Morgan Stanley & Co. LLC, August 8, 2016, p. 1, via Bloomberg, accessed November 2018.<\/p>\n

[viii]<\/a> Simeon Gutman et al., \u201cIs Walmart Flying the Right Jet?\u201d Morgan Stanley & Co. LLC, August 8, 2016, p. 3, via Bloomberg, accessed November 2018.<\/p>\n

[ix]<\/a> Daniel Binder et al., \u201cWal-mart (WMT) Interesting Acquisition and Interesting Price,\u201d Jefferies LLC, August 8, 2016, p. 1, via Bloomberg, accessed November 2018.<\/p>\n

[x]<\/a> Greg Melich and Michael Montani, \u201cWMT: Invest & Evolve,\u201d Evercore Group LLC, October 7, 2016, p. 1, via Bloomberg, accessed November 2018.<\/p>\n

[xi]<\/a> Rishi Iyengar and Sherisse Pham, \u201cWalmart is buying India\u2019s Flipkart,\u201d CNN Business<\/em>, May 9, 2018, www.money.cnn.com, accessed November 2018.<\/p>\n

[xii]<\/a> Vindu Goel et al., \u201cWalmart, With Billions to Spend, Seeks Flipkart E-Commerce Site in India,\u201d The New York Times<\/em>, April 26, 2018, www.nytimes.com, accessed November 2018.<\/p>\n

[xiii]<\/a> Jon Russell, \u201cWalmart says Flipkart is \u2018a key center of learning\u2019 for its entire global business,\u201d techcrunch.com, May 9, 2018, https:\/\/techcrunch.com\/2018\/05\/09\/walmart-says-flipkart-is-a-key-center-of-learning-for-its-entire-global-business\/, accessed November 2018.<\/p>\n

[xiv]<\/a> Randal Konik et al., \u201cDept. Stores & Specialty Softlines CLICKS vs. BRICKS Vol. 30: Dream Come True – Casper Brings Naptime to Nordstrom,\u201d Jefferies LLC, July 19, 2018, p. 1, via Bloomberg, accessed November 2018.<\/p>\n

[xv]<\/a> Mike Robuck, \u201cWalmart, Microsoft are teaming up to take on Amazon,\u201d Fierce Telecom, July 17, 2018, https:\/\/www.fiercetelecom.com\/telecom\/walmart-microsoft-are-teaming-up-to-take-amazon, accessed November 2018.<\/p>\n

[xvi]<\/a> Harshita Rawat et al., \u201cAmazon at the gates – what we worry (and don’t worry) about,\u201d Sanford C. Bernstein & Co. LLC, October 10, 2018, p. 11, via Bloomberg, accessed November 2018.<\/p>\n","protected":false},"excerpt":{"rendered":"

In a war between Amazon and Walmart for the e-commerce crown, who will ultimately win?<\/p>\n","protected":false},"author":11327,"featured_media":35025,"comment_status":"open","ping_status":"closed","template":"","categories":[4992,346,2373],"class_list":["post-34975","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-digital-innovation","category-machine-learning","category-process-improvement","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-2018\/","yoast_head":"\nCan Walmart Machine Learn its Way to the Top? - 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\/can-walmart-machine-learn-its-way-to-the-top\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Can Walmart Machine Learn its Way to the Top? - Technology and Operations Management\" \/>\n<meta property=\"og:description\" content=\"In a war between Amazon and Walmart for the e-commerce crown, who will ultimately win?\" \/>\n<meta property=\"og:url\" content=\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/can-walmart-machine-learn-its-way-to-the-top\/\" \/>\n<meta property=\"og:site_name\" content=\"Technology and Operations Management\" \/>\n<meta property=\"og:image\" content=\"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2018\/11\/Shopping-carts.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"516\" \/>\n\t<meta property=\"og:image:height\" content=\"210\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data1\" content=\"6 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/can-walmart-machine-learn-its-way-to-the-top\\\/\",\"url\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/can-walmart-machine-learn-its-way-to-the-top\\\/\",\"name\":\"Can Walmart Machine Learn its Way to the Top? - Technology and Operations Management\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/can-walmart-machine-learn-its-way-to-the-top\\\/#primaryimage\"},\"image\":{\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/can-walmart-machine-learn-its-way-to-the-top\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/wp-content\\\/uploads\\\/sites\\\/4\\\/2018\\\/11\\\/Shopping-carts.jpg\",\"datePublished\":\"2018-11-13T23:41:53+00:00\",\"breadcrumb\":{\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/can-walmart-machine-learn-its-way-to-the-top\\\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/can-walmart-machine-learn-its-way-to-the-top\\\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/can-walmart-machine-learn-its-way-to-the-top\\\/#primaryimage\",\"url\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/wp-content\\\/uploads\\\/sites\\\/4\\\/2018\\\/11\\\/Shopping-carts.jpg\",\"contentUrl\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/wp-content\\\/uploads\\\/sites\\\/4\\\/2018\\\/11\\\/Shopping-carts.jpg\",\"width\":516,\"height\":210},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/can-walmart-machine-learn-its-way-to-the-top\\\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Submissions\",\"item\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/submission\\\/\"},{\"@type\":\"ListItem\",\"position\":3,\"name\":\"Can Walmart Machine Learn its Way to the Top?\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/#website\",\"url\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/\",\"name\":\"Technology and Operations Management\",\"description\":\"MBA Student Perspectives\",\"potentialAction\":[{\"@type\":\"性视界Action\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\\\/\\\/d3.harvard.edu\\\/platform-rctom\\\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Can Walmart Machine Learn its Way to the Top? - Technology and Operations Management","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/can-walmart-machine-learn-its-way-to-the-top\/","og_locale":"en_US","og_type":"article","og_title":"Can Walmart Machine Learn its Way to the Top? - Technology and Operations Management","og_description":"In a war between Amazon and Walmart for the e-commerce crown, who will ultimately win?","og_url":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/can-walmart-machine-learn-its-way-to-the-top\/","og_site_name":"Technology and Operations Management","og_image":[{"width":516,"height":210,"url":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2018\/11\/Shopping-carts.jpg","type":"image\/jpeg"}],"twitter_card":"summary_large_image","twitter_misc":{"Est. reading time":"6 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"WebPage","@id":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/can-walmart-machine-learn-its-way-to-the-top\/","url":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/can-walmart-machine-learn-its-way-to-the-top\/","name":"Can Walmart Machine Learn its Way to the Top? - Technology and Operations Management","isPartOf":{"@id":"https:\/\/d3.harvard.edu\/platform-rctom\/#website"},"primaryImageOfPage":{"@id":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/can-walmart-machine-learn-its-way-to-the-top\/#primaryimage"},"image":{"@id":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/can-walmart-machine-learn-its-way-to-the-top\/#primaryimage"},"thumbnailUrl":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2018\/11\/Shopping-carts.jpg","datePublished":"2018-11-13T23:41:53+00:00","breadcrumb":{"@id":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/can-walmart-machine-learn-its-way-to-the-top\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/d3.harvard.edu\/platform-rctom\/submission\/can-walmart-machine-learn-its-way-to-the-top\/"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/can-walmart-machine-learn-its-way-to-the-top\/#primaryimage","url":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2018\/11\/Shopping-carts.jpg","contentUrl":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-content\/uploads\/sites\/4\/2018\/11\/Shopping-carts.jpg","width":516,"height":210},{"@type":"BreadcrumbList","@id":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/can-walmart-machine-learn-its-way-to-the-top\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/d3.harvard.edu\/platform-rctom\/"},{"@type":"ListItem","position":2,"name":"Submissions","item":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/"},{"@type":"ListItem","position":3,"name":"Can Walmart Machine Learn its Way to the Top?"}]},{"@type":"WebSite","@id":"https:\/\/d3.harvard.edu\/platform-rctom\/#website","url":"https:\/\/d3.harvard.edu\/platform-rctom\/","name":"Technology and Operations Management","description":"MBA Student Perspectives","potentialAction":[{"@type":"性视界Action","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/d3.harvard.edu\/platform-rctom\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"}]}},"_links":{"self":[{"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/hck-submission\/34975","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/hck-submission"}],"about":[{"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/types\/hck-submission"}],"author":[{"embeddable":true,"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/users\/11327"}],"replies":[{"embeddable":true,"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/comments?post=34975"}],"version-history":[{"count":0,"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/hck-submission\/34975\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/media\/35025"}],"wp:attachment":[{"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/media?parent=34975"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/d3.harvard.edu\/platform-rctom\/wp-json\/wp\/v2\/categories?post=34975"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}