How Wal-Mart is moving the needle on e-commerce | Fortune

Summary

This conversation highlights Walmart's evolving digital strategy, emphasizing the integration of its vast physical presence with e-commerce. Walmart aims to combine the convenience of digital shopping with its physical stores, creating a seamless 'one Walmart' experience. They leverage unique initiatives, such as a one-hour Black Friday guarantee and same-day delivery, while adopting new technologies and making strategic acquisitions. Walmart is focused on transforming into an internet technology company to stay competitive with Amazon. The discussion also touches on challenges, innovations, and future plans to enhance customer experience across channels.

Takeaways

• 📦 Walmart is one of the largest e-commerce organizations in addition to being the largest retailer globally, with a focus on integrating physical and digital assets.
• 🏬 The company's strategy revolves around merging physical stores and e-commerce to provide customers with a seamless shopping experience, leveraging over 13,000 stores globally.
• 📱 Walmart.com had a slow start after its 1999 launch but was relaunched three years ago with a focus on combining in-store and online shopping to enhance the customer experience.
• 📊 The 'One Customer, One Walmart' strategy focuses on viewing Walmart as one unified entity, avoiding internal competition between physical and digital operations.
• 🛒 Walmart's 'One Hour Guarantee' on Black Friday allowed customers to either take items home or get them delivered from Walmart.com, boosting traffic on mobile devices and leading to 1 million TV sales.
• 🚚 Walmart uses its stores as distribution centers in a network that includes the largest private transportation fleet in the U.S. This allows fast and cost-effective delivery solutions.
• 💻 The company is investing heavily in its tech infrastructure, acquiring companies like Grabble and Kosmix to improve customer segmentation, mobile e-receipts, and search capabilities.
• 📈 Walmart’s e-commerce is still not profitable despite projected revenues of $13 billion, but the company continues to invest in new technologies and customer acquisition strategies.
• 🧑‍💼 Store managers now benefit from all e-commerce sales within their trading areas, aligning incentives between online and physical retail.
• 📦 Walmart is experimenting with various new digital projects, like social gifting through platforms such as Shoppycat, and tests in subscription-based services, although not all of them are long-term successes.

Q & A

What is Walmart's strategy in competing with Amazon in the digital space?

Walmart's strategy focuses on building a best-in-class e-commerce experience that leverages its vast physical store network. The key differentiation is the intersection of physical and digital, where Walmart combines its e-commerce capabilities with the assets of its retail locations to provide a holistic shopping experience.

How has Walmart’s approach to e-commerce evolved over time?

Walmart’s e-commerce journey began in 1999 with Walmart.com, which initially struggled due to internal conflicts over its role versus physical stores. However, about three years ago, Walmart rebooted its digital strategy to integrate both physical and digital commerce, seeing it as a massive opportunity rather than a threat.

What is the 'One Walmart' strategy, and how does it address channel conflict?

The 'One Walmart' strategy aims to present Walmart as a single entity to customers, eliminating internal conflicts between its physical stores and e-commerce. For example, store managers are credited for all e-commerce sales in their trading areas, ensuring alignment between physical and digital operations without any loss of incentives.

What was Walmart's 'One Hour Guarantee' during Black Friday, and how did it benefit customers?

The 'One Hour Guarantee' allowed customers to receive a guaranteed deal if they were present during the first hour of Black Friday, eliminating the frustration of limited stock. Customers could either take the item home or order it online and have it shipped, which increased traffic to Walmart.com and contributed to record online and mobile sales.

How has Walmart's Black Friday strategy impacted its e-commerce performance?

Walmart's Black Friday strategy, particularly through initiatives like the 'One Hour Guarantee,' led to record traffic on Walmart.com, with over 55% of traffic coming from mobile devices. It also resulted in three times as many new customers making their first purchase via mobile, indicating strong customer acquisition.

How does Walmart balance innovation and profitability in its digital ventures?

Walmart treats its digital ventures like internal venture capital investments, where it strives to experiment and fail quickly to learn from those experiences. Projects like ShoppiCat are used to test new ideas, and although they may not move the needle in terms of profit, they provide valuable insights that can be applied across the broader business.

What role do Walmart’s acquisitions, such as Grabble and Kosmix, play in its digital transformation?

Walmart’s acquisitions, such as Grabble (for mobile e-receipts) and Kosmix (renamed Walmart Labs for search technology), are aimed at acquiring talent and technology to build in-house capabilities. These acquisitions support Walmart's strategy of building an Internet technology company within the world’s largest retailer.

What is Walmart’s approach to developing new technology and how does it apply to the customer experience?

Walmart focuses on in-sourcing technology to retain full control over development and scalability. This approach allows Walmart to adapt quickly to changing consumer needs and deliver new technology directly to enhance the customer experience, such as mobile and social shopping innovations.

What impact has Walmart’s mobile strategy had on its e-commerce success?

Walmart has seen significant success with its mobile strategy, particularly during events like Black Friday, where mobile traffic constituted over 55% of visits to Walmart.com. This shows that Walmart is effectively meeting the needs of an increasingly mobile-first customer base.

What is Walmart’s approach to delivery, and how does it leverage its physical infrastructure?

Walmart uses a combination of its physical stores, dedicated e-commerce facilities, and the largest private transportation fleet in the U.S. to form a cohesive distribution network. Walmart stores act as both customer interaction points and distribution nodes, enabling efficient same-day delivery and other fulfillment options.