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Walmart Analysis

Walmart Analysis

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Wal-Mart

Justification of selection via comprehensive arguments:
1. Wal-Mart giant retailer in America, reasons why can’t manage to get top dog e-commerce

status.
2. To offer same pattern in Pakistan for brick & mortar stores.

Introduction:
Wal-Mart's milestones began in 1962 when the first Wal-Mart was opened in Rogers, Arkansas. Seven years later the company incorporated as Wal-Mart Stores, Inc. Then a year later they opened the first distribution center and home office in Bentonville, Arkansas, and also went public on the New York Stock Exchange. Several years later, in 1988, the first super center was opened. Then in 1991, the first international unit was opened in Mexico City. By the turn of the century, Discount Store News had named Wal-Mart "Retailer of the Century" and made Fortune magazine's lists of the "Most Admired Companies in America" and the "100 Best Companies to Work For." They were also ranked on Financial Times' "Most Respected in the World" list. In 2002, Wal-Mart became number one on the Fortune 500 list and was presented with the Ron Brown Award for Corporate Leadership, a presidential award that recognizes companies for outstanding achievement in employee and community relations. Wal-Mart is currently at no.8 at global 2000 companies rating in Forbes magazine. Wal-Mart creates the ideal one-stop shopping experience. Wal-Mart is organized into ten distinct divisions. These include: Wal-Mart stores, SAM'S CLUBS, Neighborhood Markets, International, walmart.com, Tire & Lube Express, Wal-Mart Optical, Wal-Mart Pharmacy, WalMart Vacations, and Wal-Mart's Used Fixture Auctions. Through these divisions, Wal-Mart offers thousands of products. The Wal-Mart stores contain groceries, clothes, healthcare products, toys, electronics, bedding, sports and recreation, automotive, among other items. Because of this conglomeration of products, the typical consumer can go into any Wal-Mart and walk out without having to stop at another store for anything that they could need. Key numbers for fiscal year ending January, 2009: Sales: $401.2 Billion One year growth: 7.2%

Net income: $13.4 Billion Income growth: 5.3% Wal-Mart Stores (Wal-Mart or ‘the company’) is the largest retail company in the world; it operates retail stores in various formats including supercenters, discount stores and neighborhood markets. On January 31, 2008, Wal-Mart operated 891 discount stores, 2,612 supercenters, 153 neighborhood markets and 602 Sam’s Clubs in the US & units outside the United States 3,615. Internationally, the company operated units in Argentina, Brazil, Canada, Costa Rica, El Salvador, Guatemala, Honduras, Japan, Mexico, Nicaragua, Puerto Rico, the UK and China. The company is headquartered in Bentonville, Arkansas and employs about 2.1 million people. Net sales in fiscal 2009 were a record $401.2 billion, Up 7.2% from fiscal year 2008 Sam’s Club International Wal-Mart U.S.

S ales

Wal-Mart’s three business 12% Stores, Sam’s Its Wal-Mart 24% largest segment 64% business, its net sales, ended January and operates formats in the Wal-Mart’s online retail operations, walmart.com.

11.80% 24.60% 63.70%
Sam’s Club International Walmart U.S.

operations comprise segments: Wal-Mart Club and International. Stores segment is the of the Company’s accounting for 64% of during the fiscal year 31, 2008 (fiscal 2008), stores in three different United States, as well as

Its Sam’s Club segment consists of membership warehouse clubs in the United States and the segment’s online retail operations, samsclub.com. Sam’s Club accounted for 11.8% of the Company’s net sales during fiscal 2008. (Google Finance) Mission Statement Wal-Mart Stores, Inc. does not have a formal mission statement. This is because Kim Ellis, the Public Relations Coordinator, said that they believe the customers are more interested in other aspects of the business, and they, the company, are focused on meeting their basic consumer needs.

SWOT
External Analysis: Opportunities
Economic An opportunity available to the industry is the free trade zone. When the government enters into new trade agreements with foreign countries, businesses in the United States have the ability to offer products from these countries in their stores. This simply increases the markets available to retailers. Social, cultural, demographic, and environmental An opportunity facing the industry is that customers want ease of shopping. To provide the ease of shopping the industry is guaranteeing that the customers will find what they want when they want it. This is supported by convenient presentation and the right level of service every time the customer shops. Political, legal, and government An opportunity facing the industry is that the Asian market is virtually untapped by the retail world. By having an untapped market it gives a huge opportunity for companies to expand. It promises unlimited potential for growth and profits. Technological An opportunity facing the industry is that internet shopping is growing. To take advantage of internet shopping, the industry is focused around the customer. The customer receives friendly site designs, efficient order fulfillment, fast delivery and professional customer response. They process returns, refunds, and rebates quickly. Competitive An opportunity facing the industry is that the value of money is weakening. The weakening value of money will help the industry because it reduces the ability of foreign manufactures to offer discounts.

Threats
Economic A threat is that the economy is very slow right now. There is no way of preventing it and no way to change it. This impacts all businesses and causes profit margins to be reduced as price-cutting ensues to attract more consumers. Social, cultural, demographic, and environmental A threat is customer theft. Manufacturers are fighting back against customer theft by embedding paper clip sized antitheft tags, called electronic article surveillance labels, inside products and packaging. Called source tagging, the process offers several major benefits. For one, merchandise tagged on the factory floor during manufacture or packaging lets retail employees spend less time in the storeroom applying labels and more time on the show floor helping customers. Also, high-theft merchandise previously displayed behind glass can now sit out in the open, boosting sales significantly. Another social, cultural, demographic, and environmental threat is employee theft. Along with antitheft labels there are radio-frequency circuits that are hidden in packages and go unnoticed. The only time they will go off is when the bar code scanner does not deactivate the circuit, which means they stole it. This helps to prevent the two forms of employee theft, which are sweat hearting and sliding. Sweat hearting is when the employee charges the customer less than the actual price and sliding is when the employee covers the barcode at the point of sale. Political, legal, and governmental A threat is the Chinese regulations. China has one of the largest populations in the world; however, the Chinese government does not take kindly to opening their country to foreign establishments. Also, there is rampant corruption among the Chinese, and they have no generally accepted accounting principles. Technological A threat facing the industry is that technological advances may make the products obsolescent. As technology advances, products being sold today are gone tomorrow; this provides fewer products for retailers to sell. Competitive A threat is that the industry is not following consumer taste. To overcome the threat of not providing consumers wants the industry is expanding rapidly in the urban centers while

traditional "wet markets" are being edged out as the middle-class enlarges and young people flock to the cities. External Factor Evaluation An external factor evaluation matrix identifies the industry-wide opportunities and threats. Weights are assigned to the various opportunities and threats based on how well the subject company is responding to the threats and opportunities. The ratings are as follows: 1 = poor response, 2 = average response, 3 = above average response, and 4 = superior response. (Figure 2 in the appendix) The main opportunities that we identified were increasing internet shopping, ease of shopping, free trade zones, the Chinese market, and the value of the dollar. The main threats that we identified were technology making products obsolete, customer and employee theft, slow economy, the Chinese regulations, and not offering what the consumer wants. The opportunities were weighted .15 for internet shopping, .10 for ease of shopping, .10 for free trade zones, .10 for Chinese markets, and .05 for the weak dollar. The threats were weighted .10 for technology making products obsolete, .20 for customer and employee theft, .05 for the slow economy, .10 for the Chinese regulations, and.05 for not offering what consumers want. The weights and are representative of the importance the opportunities and threats presented to Wal-Mart. They were determined by considering the impact that each one has on the industry and how well Wal-Mart is conditioned to react to the situations presented. We felt that the most important factors were internet shopping, and customer and employee theft. These two factors are paramount to the industry and all of its counterpart's success. If these factors are not addressed by the industry, bankruptcy is sure to follow. We rated each of the opportunities and threats based on how well Wal-Mart has been positioning itself in the market. Wal-Mart's website has been a huge success with it contributing additional revenue to the bottom line; we rated this as a 4. The response to consumer demand for one-stop shopping has also been a success. The fact that you can buy a vast majority of everyday needs such as groceries, clothes, personal care products, electronics, among many other products shows the commitment Wal-Mart is making to the one-stop shopping idea. We also rated this 4. We felt that Wal-Mart's continued expansion into foreign countries to be above average and thus rated it a 3. Because China is heavily regulated, we rated their response to the

opportunities available in China a 2. This is still a very good score because it is very difficult for any firm to expand into China. Wal-Mart's reaction to the dollar weakening has been above average because of its worldwide coverage. They have been able to take advantage of this economic factor with ease and we rated it a 3. The response to threats has been equally impressive. While technology is constantly making products obsolete, Wal-Mart has been able to position itself to be a positive avenue for selling all of the newest and innovative products. Wal-Mart suppliers definitely have a great opportunity for sales because of the vast audience that patronize Wal-Mart. We rated this as a 3. Employee and customer theft is inevitable in all industries. This was ranked as a 2 because Wal-Mart uses the same devices that the entire industry uses. The slowing economy has been a sour point to all industries as well. Wal-Mart has been able to limit its exposure by offering low prices and maintaining its market-leading share. We ranked this factor a 4. Again, because China is such a tough market to enter, we ranked their response to Chinese regulations a 2. The idea that companies offer products that consumers do not want is not uncommon. There have been thousands of products that have flopped after being introduced. Wal-Mart has been able to circumscribe their exposure by offering thousands of products across many different areas. We ranked their response to this a 4. The final score, 2.80, that was obtained from the external factor evaluation matrix shows that Wal-Mart is above average when reacting to opportunities and threats.

Internal Analysis: Strengths
Management Wal-Mart's policies and practices are designed to ensure an environment that is equitable and inclusive. To that end, Wal-Mart solicits feedback from all of their employees, annually, regarding their opinions of their work experience and the company's implementation of Wal-Mart's basic beliefs and values. In addition, they provide training on working with people, leadership skills, equal employment opportunities, diversity and sexual harassment prevention. Wal-Mart is committed to providing all employees state-of-the-art training resources and development time to help achieve career objectives. They have a number of training tools

in place that keeps then out in front of the competition, including classroom courses, computer-based learning, distance learning, corporate intranet sites, mentor programs, satellite broadcasts, skills assessments, and job announcements. These tools are successfully increasing advancement opportunities for women and minorities. Wal-Mart has been ranked among Training Magazine's 'Top Training 100' companies for two consecutive years. Respect for the individual, one of Wal-Mart's company's three core values, is reinforced throughout their training process. Wal-Mart is committed to the customers and communities they serve. Wal-Mart hires locally, representing the diversity and uniqueness of everyone's hometown. As the demographics of the nation have changed, so has the family of Wal-Mart's employees. More than 15 percent of their employees are over the age of 55, and they are the nation's largest employer of Hispanics and African-Americans. Wal-Mart also uses its respectable financial position to attract and retain employees by offering stock ownership and profit-sharing programs. These programs are available to all full-time employees of Wal-Mart and make a significant impact on the earnings of employees. They are allowed to purchase shares of stock at reduced prices, which allows them an immediate appreciation of their portfolio. With the profit-sharing program, the employees receive bonuses at the end of the year based on the success of the overall company. These also provide a significant amount of compensation to their employees. Wal-Mart also has very strong community-based initiatives. They have continually gave college scholarships for high school seniors, raised funds for nearby children's hospitals through the Children's Miracle Network Telethon, provided money and manpower for fund raisers, school benefits and churches, Boy and Girl Scouts, park projects, police and fire charities, food banks, senior citizen centers, and more. They also educate the public about recycling and other environmental topics with the help of a "Green Coordinator," a specially trained employee who coordinates efforts to make an environmentally responsible store. Along this same line, Wal-Mart has created Environmental Demonstration Stores in Lawrence, Kansas; Moore, Oklahoma; and City of Industry, California. These stores serve as a "test tube" for environmentally friendly building materials and experimental methods for conserving energy and water. Finally, the corporate structure of Wal-Mart is very well rounded and managed with three core values: respect for the individual, service to their customers, and striving for excellence. The management of Wal-Mart is the backbone to the entire company and these core-values have propelled Wal-Mart to the top of their industry and have allowed Wal-Mart to be the world's largest company.

Marketing The nature of Wal-Mart's marketing is in its Every Day Low Price (EDLP) campaign. This is what makes Wal-Mart successful. Sam Walton devised a system for which price setting was to be followed. Sam wouldn't allow management to hedge a price at all. If the list price was $1.98, but Wal-Mart had paid only 50 cents, they would mark it up 30 percent, and that's it. Sam's philosophy was "No matter what you pay for it, if we get a great deal, pass it on to the customer." The other major campaign Wal-Mart employs is the Rollback. This occurs when WalMart lowers the already lowered Every Day Low Prices. This has really been a successful way for Wal-Mart to increase its patrons. When consumers shop, they are always looking for the best deal, since Wal-Mart already offers low prices, when they rollback prices, they are able to out-price all of their competition. Stemming from the management's core values, Wal-Mart has been known for their customer oriented approach. Wal-Mart maintains one of the best satisfaction guaranteed programs, which promotes customer goodwill. One can return virtually any product to Wal-Mart without any problems. They simply take the product back and promptly refund the price of the product, nearly no questions asked. They also promote goodwill among consumers by employing a tactic, which Sam created known as the "Ten Foot Rule." This is simply the idea that if a customer comes within ten feet of an employee, they are required to greet them and ask if they can help them in any way. This is also evident through employees getting to know customers on a first name basis. Finally, perhaps the single most important marketing aspect of Wal-Mart is that they create the ideal one-stop shopping experience. Wal-Mart is organized into ten distinct divisions. These include: Wal-Mart stores, SAM'S CLUBS, Neighborhood Markets, International, walmart.com, Tire & Lube Express, Wal-Mart Optical, Wal-Mart Pharmacy, Wal-Mart Vacations, and Wal-Mart's Used Fixture Auctions. Through these divisions, Wal-Mart offers thousands of products. The Wal-Mart stores contain groceries, clothes, healthcare products, toys, electronics, bedding, sports and recreation, automotive, among other items. Because of this conglomeration of products, the typical consumer can go into any Wal-Mart and walk out without having to stop at another store for anything that they could need. Finance/Accounting Since 2000, Wal-Mart's revenue has consistently increased. In 2000, they had revenues of $165,013 billion and in 2002 their revenue had increased 24% to $217,799 billion. This is astronomical growth in revenues considering the overall size and scope of Wal-Mart. Top

be able to consistently grow revenues in such a large organization is simply amazing. The increase in revenues has also been very kind to their cash flow. In 1997, Wal-Mart had a positive cash flow of $4,044 billion and in 2002 this number had increased to a positive $9,961 billion. This growth also had an impact on Wal-Mart's net income, which is to say that they were able to control their expenses while continuing to grow and expand their operations. In 1997, their net income was a not-so-paltry $3,056 billion, and in 2002, only five years later, Wal-Mart more than doubled their net income to $6,671 billion. The strength of Wal-Mart is also shown through its ratios. Nearly all of Wal-Mart's ratios are strengths when measured against the industry averages. Through our ratio analysis, we have shown that Wal-Mart is the best-equipped company to succeed in the marketplace. (The ratio analysis can be found as Figure 3 in the appendix) Another area of strength is Wal-Mart's stock price. Figure 4 shows the price of WalMart's common stock from October 2000 until the end of 2002. The price has fluctuated, but it has only fluctuated between $45 and $65. Including dividends, an investment in Wal-Mart would perform well. Production/Operations Perhaps the strongest aspect of Wal-Mart is in its access to distribution networks. WalMart uses a system known as cross-docking. This is simply the process of continuously delivering goods to warehouses where they are sorted and distributed to their stores within one day. This enables Wal-Mart to take advantage of economies of scale with shipping trucks with full loads. This also gives Wal-Mart the ability to increase the speed of deliveries, a faster response to market demands, and a low inventory. This system has allowed Wal-Mart to decrease its sales cost by 2 to 3 percent over the industry. This savings is then priced into the products with the earlier discussed EDLP programs. This system is maintained through the most important aspect of Wal-Mart, its employees. With over one million employees worldwide, Wal-Mart definitely has the manpower to move goods. This is also facilitated with a proprietary satellite-based communication system that enables managers and point-of-sale systems real-time information on the needs of each store. Research and Development Wal-Mart does not engage in any research and development. Like if Wal-Mart is to open a new store in a city it just goes and open store without any prior research.

Computer Information Systems As discussed in the production/operation section, Wal-Mart uses a sophisticated system of satellite-based communications. They also offer a safe, secure and complete website where consumers can purchase all of the same products found in the store. The website is strength because it is not only a means for purchasing products, but is also a very thorough informational site. Consumers can log onto http://www.walmartstores.com/ and do company financial searches, find employment, learn about the grassroots of Wal-Mart, email the company about problems, and learn about any recalls of products sold through Wal-Mart.

Internal Analysis: Weaknesses
Management The biggest weakness that Wal-Mart has in the management area is that it does not have a formal mission statement. While they do have core values, they do not explicitly tell their employees or consumers what their business is. This is a fundamental aspect of a company and it provides not definition and direction, but it gives a company a statement on which to rely on to stay strong and focused. Another weakness is that there are few females in top management and there are few minorities employed. With such a societal demand for equality, Wal-Mart is lacking in this category. This is not a very good ethical decision for Wal-Mart to be making. They are really hurting their corporate image by maintaining this position. The other area that Wal-Mart lacks in is with unions. Currently, Wal-Mart does not have any union involvement. This is a problem because of the perception of treating employees poorly. Unions are created to provide bargaining power to employees on issues that involve their compensation, benefits, and working conditions. This is also a weakness because of job security. With unions, job security is not as much of a concern. Marketing The biggest source of marketing weakness stems from Wal-Mart lobbying to expand into new markets. There are thousands of towns across the United States that have tried to block the introduction of Wal-Mart because of the economic impact that it has on smalltown stores and shops. Wal-Mart has a damaged reputation because when they move into a location they end up "forcing" these types of businesses out of business.

Finance/Accounting Weaknesses in Wal-Mart's finances are seen in three of its ratios. The fixed asset turnover, earnings per share, and average collection period ratios are not very good. The fixed asset turnover ratio is telling us that they have made a lot of investments, but that they are not being fully used at this point in time. The earnings per share ratio is not good because when compared to the industry, they are not earning as much money for each shareholder. However, this is most likely due to the sheer number of outstanding shares. The average collection period is a cause for concern because it means that they are allowing their debtors to carry accounts with Wal-Mart for an above average period of time. This is not good because it increases the likelihood of non-payment. (These ratios can be found in Figure 3 of the appendix) Production/Operations The largest source of concern for this functional area is the slowing speed of checkout lines. This is simply a product of Wal-Mart's success. Because more and more people are going to Wal-Mart, and the number of checkout lines is staying constant, the only way to compensate is for the time to checkout increase. This is a problem because it can and will cause people to choose other stores that are less congested. They are basically losing sales due to this fact. Research and Development This is a weakness because they do not actively engage in any research and development. Specifically, they do not do any prior site research before opening a store. They simply approach a local government and build. Computer Information Systems We did not find any weaknesses in Wal-Mart's computer information systems. Internal Factor Evaluation The internal factor evaluation is used to evaluate the major strengths and weaknesses of a company. There are weights assigned to strengths and weaknesses based on how the company responds to them. The ratings are: 1 = poor response, 2 = average response, 3 = above average response, and 4 = superior response. (Figure 5 in the appendix) The key strengths we identified were financial position, employees, customer oriented, one-stop shopping, satisfaction guaranteed programs, employee stock ownership and profit-sharing, well-rounded business, ease of website, good reputation, and favorable

access to distribution networks. Along with key strengths of Wal-Mart, we also identified key weaknesses. The key weaknesses are some ratios are not sufficient, non-unionization, no formal mission statement, few women and minorities in top management, undifferentiated products and services, site research, slow speed of checkout service, and finally a damaged reputation. The strengths were weighted: .04 for financial position, .07 for employees, .07 for customer orientation, .14 for one-stop shopping, .05 for satisfaction guaranteed programs, .05 for stock ownership and profit-sharing, .03 for well-rounded business, .04 for ease of website, .04 for good reputation, and .04 for favorable access to distribution networks. The weaknesses have also been weighted. The weaknesses weighted scores were .03 for insufficient ratios, .15 for non-unionization, .05 for no formal mission statement, .05 for few women and minorities in top management, .03 for undifferentiated products and services, .05 for site research, .04 for slowing speed of checkout service, and .03 for a damaged reputation. These weights show the importance of each strength and weakness of Wal-Mart. They are determined by how important that quality is to Wal-Mart and how hard of an impact each has against other businesses. We felt that the most important factors were one-stop shopping and non-unionization. These two factors are very important to Wal-Mart's structure and well being as a whole. If these factors are not evaluated regularly, they could put a start to its potential downfall. We rated each strength and weakness based on how Wal-Mart seems to be positioning itself against its competitors. Wal-Mart's employees, customer orientation, one-stop shopping, satisfaction guaranteed programs, stock ownership and profit sharing, ease of website, good reputation and favorable access to distribution networks all have been very successful strengths for the company. These are so successful we rated each with a 4. The financial position of Wal-Mart and the well-rounded business that it is has made WalMart what it is today. Because of this success we rated these factors with a 3. In their weaknesses, we thought that minor weaknesses included: non-unionization, no formal mission statement, few women and minorities in top management, undifferentiated products and services, site research, and the slowing speed of checkout service. Since these were only minor we gave them a score of 2. We also rated some major weaknesses. These included insufficient ratios and their damaged reputation, which we rated as a 1. By using these scores in the internal factor evaluation matrix, we came to a total score for Wal-Mart being a 3.01, which is above average. They are above the average company when it comes down to its strengths and weaknesses and how they deal with them.

Revenue Models
Not all e-Commerce initiatives generate revenue. Some companies seek to reduce costs or improve customer service. These approaches work for B2C or B2Bwork B2B. Revenue models can be following:

1. 2. 3. 4.

Web Catalog Advertising supported Advertising subscription mixed Fee-based

Web Catalog Model
Based on mail order catalog model ––it’s been used for over 100 years. Aaron Montgomery Ward, Richard Sears, Alvah Roebuck……used this model in the 1890’s. Web catalog model is successful for a wide variety of consumer products. Customers can buy through the web site or by phone. Some shoppers obtain information online and then order by phone. Mail-order businesses found success expanding to the web. Web catalog model is used by Computers, electronics, books, videos, luxury goods, clothes, flowers, general discount merchandise.
1.

Computers companies e.g. Apple, Dell, Gateway, Sun Microsystems use web catalog
model. Sell a full range of products. Allow consumers to specify the exact configuration they want (Dell).

2.

Consumer electronics e.g. Best Buy, Circuit City, The Good Guys!, Radio shack also
use this model.

3.

Books seller Amazon used this model K& this inspired other booksellers to jump in
e.g. Barnes & Noble, Blackwell’s, Books-A-Million, Powell’s Books.

4.

Music & Videos e.g. CDNow, Tower Records, Sam Goody CD Universe.

5. Luxury Goods e.g. Vera Wang, Versace, Evian, Tiffany & Co. 6. Clothing Retailers e.g. Bebe, Gap, Lands’End, L.L. Bean, Talbots, Wet Seal. 7. Traditional retailers e.g. Costco, Kmart, Target, Wal-Mart. Have slowly incorporated e-Commerce.

Wal-Mart also use web catalog model as given.

Accepted Payment Methods
We accept the following methods of payment: Wal-Mart Credit Card. Wal-Mart Gift Cards and Online Gift Cards with a PIN. Bill Me Later ®. PayPal ®. Credit cards: American Express, Discover and Wal-Mart Discover, MasterCard, Visa. ATM/Debit /check cards with a MasterCard or Visa logo on the front (including the Wal-Mart Money Card). We are not able to accept the Wal-Mart Community and Business Card. We do not accept checks or money orders. Note: Walmart.com supports Verified by Visa (VbV), a security technology that authenticates your Visa card and ensures that only the authorized cardholder is placing the order.
• • • • • •

If Your Card is Issued by a Non-U.S. Bank
To ensure the safety and security of your financial information and prevent unauthorized use of your credit or debit card, Walmart.com performs security checks in partnership with third parties. Unfortunately, some non-U.S. based cards may not pass the designated information and security checks. Failure to meet the appropriate security criteria will prevent Walmart.com from completing your transaction. A notification with the final status of your order will be sent via email; however, to ensure the security and privacy of our customers, we will be unable to provide additional details for any incomplete orders.

Wal-Mart Credit Card and Wal-Mart® Discover®

The Wal-Mart Credit Card is accepted at Wal-Mart, Sam's Club, Walmart.com, Thrifty Car
Rental, AOL and Wal-Mart Connect.

The Wal-Mart Discover is accepted everywhere you see the Discover Network sign. When is my order charged?
If you pay by Gift Card or Paypal®, the money is deducted at the time you place your order. If you pay using Bill Me Later®, your Bill Me Later account will be charged when your order ships. You will receive a statement from and submit your payment to Bill Me Later.

If you pay by credit or ATM/debit/check card, the payment amount is authorized and held by your financial institution at the time you place your order and your account is actually charged when your order ships.

Your Payment Information
Near the end of Checkout, you will be asked to choose a payment method. Here is the information required for each type: For credit cards and ATM/debit/check cards, you will need to enter your credit card type, credit card number and expiration date, as well as your name, address and phone number as they appear on your card statements • For Bill Me Later, you will need to enter your name, address, phone number, date of birth and the last four digits of your Social Security number • For Gift Card payments, you will need to enter your Gift Card number and PIN • For PayPal, you will need to enter your PayPal login information and password. Once logged in, you'll be temporarily rerouted to the PayPal site to confirm your payment. We are committed to protecting your privacy. Walmart.com will never sell or rent any of your personal information under any circumstances.

After all, more than 85% of e-commerce transactions are completed with a credit or debit card, according to Javelin Strategy and Research, a market researcher. For those Internet shoppers who have either cut up their cards, don't have credit or who are just plain scared of getting their information stolen, there are alternate-payment services. PayPal, which is owned by eBay, is the oldest and most well-known of these services. PayPal enables shoppers to pay immediately with a credit card, bank account or e-check or, with PayPal's Pay Later service, they can put the purchase on a line of credit to be paid off later in monthly installments. Swiftly growing Bill Me Later, which launched in 2002, is the most widely accepted at top e-commerce sites — including those of Wal-Mart, Amazon.com and PetSmart, according to Brulant Inc., a market researcher. The service puts orders on a line of credit and sends customers a paper bill. After placing their order, shoppers using newcomer eBillme receive a virtual bill that they can later pay using money from their bank account. Once the payment has been made in full, the retailer sends the customer their goods. High Interest Rates PayPal's buyer credit option charges a variable 22.75% APR, while Bill Me Later has an interest rate of variable 19.99%. For comparison's sake, standard credit cards carry an average rate of 13.89% variable, according to Bankrate.com. For consumers with great credit, those rates could be much lower. WHY Wal-Mart uses such an enhance payment system as it is in stiff competition with Amazon. Also offering customers more ease, ensuring security to the payment system as well. Facilitating customers with enhance multiple payment system.

Why launch web portal:
1. Expansion of dial-up Internet access to rural areas where the only current option is longdistance. 2. Offering value additions to customers. 3. Supply chain management offering. 4. Consumers want ease of shopping. 5. Internet shopping growing. 6. Elderly population growing. 7. Asian market virtually untapped by retail. 8. European Market untapped by retail. 9. Environment conscious consumers.
10. Retail sales expected to increase.

Website history:
First web-site in 1996 contains information about the company, no online store. The initial launch of the web site was deemed a failure for several reasons such as lack of product selection and difficulty of use. According to e-commerce analysts, the website lacked user friendliness (it was extremely difficult to navigate), utilized below standard graphics along with a poor choice of colors, all of which made the website extremely difficult for consumers to navigate. The original website was therefore unsuccessful and unprofitable. According to Wal-Mart spokesperson Melissa Brown, “the web site is yet to make a significant contribution to our sales.” 1999, a store logistics, trouble! Everyone decided to holiday shop online that year, caused major headaches for many stores. This result in lost orders, late shipments, missed Christmas. Wal-Mart spent $100 million, on another website. This time again results in failure due to Usability problems, slow loading, confusing. After 8 months, they took it down completely for 4 weeks! In 2002, walmart.com matured, offering order status and tracking, a help desk, a clear return policy and mechanisms, a store locator, and information on special sales and liquidations. Also, community services such as photo sharing are provided. New web site works! This website offers approx 1,000,000 products. This new website was supported by a dedicated central distribution center that only serves Wal-Mart.com. Wal-Mart spent more than $150 million getting it right.

Merits or demerits of conducting business online
The giant discounter's true strength online is in its bricks 'n clicks integration, tying its Web site into its real world stores. "We recognized that one of the greatest values is in integrating the online and offline channel," says Wal-Mart's Lin.

Merits of conducting business online:
1. Offering order status and tracking. 2. Help desk.
3. Clear return policy and mechanisms. (Wal-Mart.com has the distinct advantage in this

area. If customers are unhappy with their online purchases, they can return the item to their local Wal-Mart.). 4. The new Wal-Mart.com plans to offer their customers over 900,000 items that could be found in any of 24 departments such as gardening and electronics. The Broadvision

technology being used provides website personalization such as store locators, maps, login profiles and a purchase history.
5. Information on special sales and liquidations.

6. The site offers an online travel agency that allows customers to make travel reservations, purchase airline tickets, etc.
7. Integration of both online & offline business e.g. the site also offers a photo center.

Customers can drop off film at a nearby Wal-Mart, view their photos online, have them printed at any Wal-Mart worldwide and finally, email them to others. 8. Tax advantages. Being such a large international corporation, Wal-Mart is located in almost every U.S. state. This means that sales tax would have to be collected on all purchases. The formation of the .com version however, limits sales tax collection to three states: California, Utah and Arkansas. The .com company has a physical presence in these three states requiring sales tax collection. You can, for example, chose replacement tires at Walmart.com and have them installed at a local Wal-Mart. The site's pharmacy section lets you place an order to be picked up locally; you can also view your prescription history online and set up e-mail reminders for refills. The site's vision center offers a similar service for contact lenses.

Demerits:
Although Wal-Mart.com ranks high in customer satisfaction, its website has several flaws. This is a major obstacle for the offline giant to compete with the online giants such as Amazon.com and etoys. 1. Weak search engine (For example, in 2004, if you utilize the search to find Need for Speed 5, a very popular video game, the search engine will not find it. This is despite the fact that if one clicks on the video game section there will be an advertisement for the game.) 2. Another major flaw is that Wal-Mart.com does not have the required bandwidth capabilities to handle heavy traffic. 3. According to Forester Research, the website has slow response time, which may be a deterrent to potential visitors. 4. It still lacks the customer personalization features used by Amazon, and its straightforward blue and white design gives it a dowdy look. 5. Heavy running costs.

6. Wal-Mart website has often closedown as from this:

Competitors Analysis:
Amazon.com and Netflix shared the No. 1 ranking in customer satisfaction among the largest online retailers, according to an annual survey of holiday shoppers released Tuesday. (30 December 2008, FGI Research) 1. Amazon and Netflix 2. QVC 3. Apple.com, Barnes & Noble, BN.com, LL Bean.com, Newegg.com,walmart.com About Amazon.com Amazon.com, Inc. AMZN, a Fortune 500 company based in Seattle, opened on the World Wide Web in July 1995 and today offers Earth's Biggest Selection. Amazon.com, Inc. seeks to be Earth's most customer-centric company, where customers can find and discover anything they might want to buy online, and endeavors to offer its customers the lowest possible prices. Amazon.com and other sellers offer millions of unique new, refurbished and used items in categories such as Books; Movies, Music & Games; Digital Downloads; Computers & Office; Electronics; Home & Garden; Grocery, Health & Beauty; Toys, Kids & Baby; Apparel, Shoes & Jewelry; Sports & Outdoors; and Tools, Auto & Industrial. Amazon Web Services provides Amazon’s developer customers with access to in-the-cloud infrastructure services based on Amazon's own back-end technology platform, which developers can use to enable virtually any type of business. Examples of the services offered by Amazon Web Services are Amazon Elastic Compute Cloud (Amazon EC2), Amazon Simple Storage Service (Amazon S3), Amazon Elastic Block Store, Amazon SimpleDB, Amazon Simple Queue Service (Amazon SQS), Amazon Flexible Payments Service (Amazon FPS), Amazon Mechanical Turk and Amazon CloudFront. Amazon and its affiliates operate websites, including www.amazon.com, www.amazon.co.uk, www.amazon.de, www.amazon.co.jp, www.amazon.fr, www.amazon.ca, and www.amazon.cn. As used herein, “Amazon.com,” “we,” “our” and similar terms include Amazon.com, Inc., and its subsidiaries, unless the context indicates otherwise.

Amazon growth factors: Several factors drive this growth. They include Amazon expanding into new categories beyond books and music—more than a dozen in the past year.

The e-retailer’s free shipping offers and low prices encourage frequent purchases by 81 million active Amazon shoppers. And thousands of other retailers are helping expand Amazon’s selection by selling on Amazon— even though it means paying a commission and handing over customer data to a competing eretailer. Those picks and shovels include a variety of services Amazon offers partner retailers, such as handling payment and fulfillment. But the biggest lure is the opportunity to reach Amazon’s massive customer base.

Financial Information’s:
Net sales increased 29% to $19.17 billion, or 28% excluding the $127 million favorable impact from year-over-year changes in foreign exchange rates throughout the year, compared with $14.84 billion in 2007. Operating income increased 28% to $842 million, or 27% excluding the $10 million favorable impact from year-over-year changes in foreign exchange rates throughout the year, compared with $655 million in 2007. Included in 2008 operating income is a $53 million non-cash gain recognized on the sale of the Company’s European DVD rental assets. Net income increased 36% to $645 million in 2008, or $1.49 per diluted share, compared with net income of $476 million, or $1.12 per diluted share, in 2007.

The Amazon Way
Many retailers claim to be customer-focused. At Amazon, the first of the company’s six “core values” is: “Customer obsession: We start with the customer and work backwards.” The other five building blocks of Amazon founder Jeff Bezos’s business philosophy are innovation, a bias for action, ownership, setting the hiring bar high and frugality. These guideposts are taken seriously within Amazon, and employees are reviewed every six months on how their performance stacks up against them, says a former employee who asked not to be named. “This is Jeff’s way of codifying what keeps a company alive and spirited and keeps people innovative, as if they had the high dreams you associate with start-ups,” he says. Bezos believes strongly in employees taking ownership of their work, which made him reluctant, even as the company grew dramatically, to hire temporary contractors and to create separate teams to maintain software developed by others, the former employee says. “He was concerned that if the people who create the user experience, the web pages, are divorced from the long-term maintenance, they will become separated from the actual costs of customer complaints and bugs,” he says. “And that will lead to lower-quality software.” As for frugality, Amazon uses Linux as the operating system for its thousands of servers, which means it does not have to pay license fees for operating system software.

Recommendation:
1. Wal-Mart should clear its mission statement. 2. Find affiliates in areas outside of major cities where store closings have limited consumer choice in your category. 3. Enhance product images, add video and upgrade training of service agents to appeal to new online shoppers. 4. Highlight sale items and special offers in site search results. 5. Use strong color to attract more customers. 6. Promote use of live chat to reduce call center costs. 7. Use website to clear its position against critics like wakeup Wal-Mart & Wal-Mart sucks. 8. Enhance usability by offering live chat options offering customers saving as well as value additions.

In a nutshell, with the power of this integration, leveraging its massive offline presence to compliment its e-commerce operation, it may not matter that Walmart.com lags its online rivals. It is, after all, an effective part of an overall retail operation that generate 401.2 billion in revenue in 2008 (to put that in perspective, Amazon’s revenue is a paltry $19.17 billion). With a jawdropping revenue figure like that, Wal-Mart can afford to take its time in growing its online market share.

Bibliography
Wal-mart.com Google.com Internet retailer.com Wikipedia.com Wakeup Wal-Mart.com Forbes.com Alexa.com Seo scores.com Fast company.com Com Score.com Internet.com Ludwig von Mises Institute Hit wise.com

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