Walmart Gets Serious About E-Commerce ✓ Solved

Case Walmart Gets Serious About E-Commerce

The goal of this assignment is to analyze Walmart's e-commerce situation and strategy. Read the following case (taken from Chapter 1 of our textbook). You are welcome and encouraged to do additional research of your own. As the world’s largest retailer, Walmart has built thousands of brick-and-mortar stores in the United States, Mexico, and elsewhere. Although a success story when it comes to traditional retail locations, Walmart has struggled with its e-commerce efforts, with recent online sales accounting for about 3 percent of the company’s $300 billion in annual sales.

The company has tried several different e-commerce strategies in the past, but none of them was an overwhelming success. Some company insiders objected to the pricing strategy used for online purchases; they were fearful that Walmart’s lower prices online would take customers (and sales) away from the retail locations. Doug McMillon, Walmart’s CEO since 2014, believed a significant change was needed in the company’s e-commerce business, and he recently made changes in a big way. Over the past two years, Walmart spent billions to acquire several online companies to expand its e-commerce business in an effort to take a small bite out of retail giant Amazon’s success. In 2016, Walmart purchased Jet.com, an e-commerce site that sells a little bit of everything (books, clothing, electronics, etc.) at discount prices.

Once the $3 billion acquisition was completed, Jet’s co-founder and CEO, Marc Lore, who now runs Walmart’s e-commerce platform, worked with McMillon to identify other established online companies to add to their e-commerce portfolio and add they did. First Walmart purchased footwear e-tailer ShoeBuy for $70 million in January 2017. The following month, Walmart bought outdoor specialty retailer Moosejaw for $51 million. Then in March, Walmart paid $75 million for ModCloth, an eclectic shopping site for women’s fashions. Walmart is also said to be in negotiations to buy Bonobos, a hip fashion retailer geared to millennial males.

Reaction to the acquisitions has been mixed, depending on whom you ask. Retail analysts applaud the company’s radical move, pointing out that several well-known traditional retailers have closed their doors or filed bankruptcy because they failed to take part in the e-commerce revolution. Fashionistas, on the other hand, are lukewarm about the move. However, McMillon’s decision to allow online retailers to operate independently may help retain loyal customers. The new e-commerce strategy may also lure typical in-store shoppers to take advantage of the expanded offerings available through both Walmart.com and Jet.com.

Answer the following questions: 1. What are some advantages of Walmart purchasing established web businesses? 2. What impact is Walmart’s acquisition of nontraditional retailers likely to have on the shopping habits of Walmart’s customers? 3. How will the aggressive e-commerce plan implemented by Walmart affect operations at its retail locations?

Paper For Above Instructions

Walmart, the largest retail corporation in the world, has faced considerable challenges in adapting to the rapidly changing landscape of e-commerce. The company’s strategy to purchase established online businesses is significant for multiple reasons. Firstly, acquiring established web companies allows Walmart to leverage existing customer bases and brand recognition without the lengthy process of developing its e-commerce platforms from scratch. For example, the acquisition of Jet.com in 2016, an e-commerce site known for its competitive pricing, provided Walmart with a ready-made platform to enhance its online offerings (Stone & Boyle, 2017).

Furthermore, these acquisitions allow Walmart to diversify its product range and improve its overall value proposition. By integrating niche retailers like Moosejaw and ModCloth, Walmart can reach new customer demographics and attract shoppers who may not have previously considered shopping with the brand (Heller, 2017; Wahba, 2017). This strategy aligns with consumer trends gravitating towards more specialized products, enhancing Walmart’s competitive edge against Amazon, which has dominated the e-commerce market.

The impact of Walmart’s acquisition of nontraditional retailers is likely to significantly alter the shopping habits of its customers. By offering a wider range of specialized products online, Walmart can cater to varied customer preferences, encouraging loyal in-store shoppers to make purchases online as well (Abramson, 2017). The presence of distinct brands under the Walmart umbrella may also attract new customers who are searching for quality goods from brands they trust. The overall effect is that it fosters a more loyal customer base, potentially increasing Walmart’s share of the e-commerce market.

Moreover, as Walmart implements its aggressive e-commerce strategy, operations at its retail locations will inevitably be affected. The increased focus on online sales will necessitate changes in supply chain and inventory management practices to ensure that both physical stores and e-commerce channels are adequately stocked and efficiently managed (Stone & Boyle, 2017). This shift could result in a more centralized operational model where data from both online and offline sales inform inventory decisions. The enhancement of logistics and fulfillment strategies is crucial to manage the flow of products smoothly, ensuring that customer expectations for quick delivery and availability are met.

Additionally, the expansion into e-commerce may lead to an increase in the use of technology within Walmart’s stores. Retail locations might be used as distribution centers for online orders, which could involve reconfiguring physical spaces to accommodate this dual purpose. Consequently, store staff may require additional training to handle both in-store and online customer interactions effectively, enhancing the overall customer experience (Wahba, 2017).

Overall, Walmart's e-commerce strategy through acquisitions exemplifies a proactive approach to market challenges. By investing in established online businesses, Walmart not only broadens its portfolio but also addresses growing consumer demands for convenience and variety. As the company continues to navigate the complexities of e-commerce, its ability to integrate these acquisitions will be crucial to its success in this fiercely competitive market.

References

• Abramson, A. (2017). Walmart Acquires Online Women’s Retailer ModCloth. Fortune.
• Heller, L. (2017). Take That Amazon: Walmart Buys Moosejaw for $51 Million. Forbes.
• Stone, B., & Boyle, M. (2017). Amazon Won’t Know What Hit ’Em! Bloomberg Businessweek.
• Wahba, P. (2017). Walmart’s 29% Online Holiday Season Growth Sends Shares Jumping. Fortune.
• Wahba, P. (2017). Walmart Acquires ShoeBuy for $70 Million. Business Insider.
• Wahba, P. (2017). What an Acquisition of Bonobos Would Signal About Wal-Mart’s Strategy. Forbes.
• Stone, B. (2017). Walmart Acquires Niche Online Retailers, to the Dismay of Hipsters. Denver Post.
• Heller, L. (2017). Walmart’s Aggressive E-Commerce Strategy: Is It Enough? Forbes.
• Wahba, P. (2017). Walmart's E-Commerce Strategy Explained. Fortune.
• Stone, B. (2017). How Walmart Is Competing in the Digital World. Bloomberg Businessweek.