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April, 2004 Hui Liu, Tahani Magid, Paul Gillete
Multimedia Case: Walmart.com
When Sam Walton was announced to be the richest person in the United States back in 1985 by Forbes Magazine, few people could have predicted his success. Sam Walton founded a retail company now known as Wal-Mart Stores, Inc.. This company sprouted up from nothing and has developed into an organization that even today Sam Walton would be in awe when admiring it. He laid the foundation for Wal-Mart’s organizational success. This success can be attributed heavily to two things: belief in his people and a constant effort to be on the leading edge of technological and marketing trends. Sam Walton was often criticized and admired for his attitude of “try and try again.” This attitude can still be seen in the organization. Wal-Mart continuously tests new technologies and concepts. This is evidenced by strong consumer support of its Wal-Marts, Supercenters, Sam’s Clubs and Neighborhood Markets. Wal-Mart keeps churning out new concepts and the public continues to react in a supportive manner. This continues to swell the coffers of the Walton family and now, shareholders alike. Wal-Mart always seems to take the lead. In the late 1990’s, however, something seemed to change. Wal-Mart was slow to jump into the ecommerce frenzy. Shareholders and market analysts criticized it while other companies leaped in and became category killers such as Amazon.com and drugstore.com. Wal-Mart had a website up and running but it was ineffective. The analysts and consumers expected nothing but the best from Wal-Mart. This had always been their track record in the past. K-Mart and others had launched their websites and still, Wal-Mart seemed to sit back while others began to dominate the marketplace.
Wal-Mart Stores, Inc. was founded in 1962 by Sam Walton. It has grown from the first single store to a mammoth international corporation. Wal-Mart is located throughout most of the United States, Puerto Rico, Mexico, Indonesia, Canada, Argentina, China and Brazil. It divisions include McLane’s Northeast, Sam’s Club, CIFRA, ASDA, and Neighborhood Markets. Wal-Mart is currently one of the largest employers in the United States next to the Federal government. It currently has over 910,000 employees. Wal-Mart has annual sales in excess of $165 billion for the fiscal year ending 1/31/2000, a 20% increase over the previous year. The newest division, Walmart.com, is an upstart located in Palo Alto, California. Wal-Mart is constantly looking for ways to expand and develop its business and the .com avenue is its latest. Wal-Mart’s Business slogan is “Always the Lowest Prices, Always”
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“Several Wal-Mart officials consider the website to be an instrumental tool for the future” said Brown. Along with the new company Wal-Mart has several new initiatives to promote to its web site. collaborated with Amadeus.com WAL-MART. Accel members.COM Although the company Wal-Mart. 2000 the board members and senior management include Rob Walton as Chair. “We are not trying to revolutionize Internet commerce the same way we revolutionized the retail industry. expansive product selection. Hewlett-Packard.com is not trying to compete with online companies. The initial launch of the web site was deemed a failure for several reasons such as lack of product selection and difficulty of use.” Evidence of this is a five-week study 2 . “The combination of the trusted Wal-Mart brand and retail expertise. Broadvision is the leading worldwide supplier of personalized e-business applications. president and CEO of Broadvision.” Three years later. According to Wal-Mart spokesperson Melissa Brown. utilized below standard graphics along with a poor choice of colors. Wal-Mart places a higher priority in the web site making it a separate business entity that is mainly run by Wal-Mart but is partly funded by Accel. Wal-Mart. the management roster includes Wal-Mart executives. Cambridge Technology Partners. in turn. James Brier. and recruits from Fortune 500 companies. along with the company-building and technology savvy of Accel Partners is an exciting development for our customers. Although the process is not complete. CA. vice chairman of Wal-Mart. Pehong Chen. its purpose it is to better serve the customers. a former GAP executive who played a critical role starting up Gap’s online division. “Broadvision is proud to be the technology for Wal-Mart’s re-launch of its online superstore to offer Internet shoppers a combination of in-depth. The site runs on Hewlett-Packard equipment and an Informix database. the web site has been around since 1996. and Jeanne Jackson.com is new. By placing its headquarters in Palo Alto. “Wal-Mart has earned a global reputation as a leader in retail merchandising. they are positioned in the top area for recruiting e-commerce and internet experts. Analysts and Wal-Mart officials hope that these initiatives and the new user-friendly web site will insure Wal-Mart.com is utilizing Broadvision technology to run its website. new services and convenient and flexible purchase and delivery options that only a retailer with an enormous merchandise base can offer.” said Dr. Chief Operating Officer Lee Scott stated. Wal-Mart’s current Chief Operating officer as Vice Chair. According to e-commerce analysts. a venture capitalist firm based in California’s Silicon Valley.” said Lee Scott. an Accel partner as Board member. the website lacked user friendliness (it was extremely difficult to navigate). Broadvision. The original website was therefore unsuccessful and unprofitable. Lee Scott. Currently Wal-Mart is in the process of recruiting top-level management with related experience in e-commerce. all of which made the website extremely difficult for consumers to navigate.com’s success. “the web site is yet to make a significant contribution to our sales.” The system has the capacity of serving 20000 concurrent users. As of March 3.Multimedia Case: Walmart. CHALLENGES OF ENTRY INTO E-COMMERCE Wal-Mart. Despite the dismal results of its initial website. Quantum Leap Communications. It runs on Broadvision’s OneTo-One ™ Retail Commerce e-business application. Wal-Mart was not reluctant to launch a new one. and Site and Sound Software. customized functionality.
com sells nineteen. if you utilize the search to find Need for Speed 5.com search engine cannot retrieve some of the most popular items. There is the potential for competition with the physical stores. they can return the item to their local Wal-Mart.S.000 items that could be found in any of 24 departments such as gardening and electronics.School of Information Studies. especially with electronics. The site needs to entice new customers to shop. WalMart. log-in profiles and a purchase history. Wal-Mart is being careful not to draw from its brick and mortar base and thus inhibit growth. limits sales tax collection to three states: California. despite the fact that Wal-Mart.com. The site also offers a photo center.com has over twenty-four categories. Syracuse University that was conducted by Ernest and Young indicating that Wal-Mart. Although Wal-Mart. This is despite the fact that if one clicks on the video game section there will be an advertisement for the game. The Broadvision technology being used provides website personalization such as store locators. the website has slow response time. FEATURES OF THE SITE The new Wal-Mart. One of the major flaws is its weak search engine. the search engine will not find it. Therefore.com but make take the first plunge with a company such as Wal-Mart. Wal-Mart is enticing customers to visit both businesses through features such as film processing. Wal-Mart. maps.com sells only two 31-36 inch sets while Circuitcity. While e-tailers such as Amazon. this interactivity of the two versions of the business is created to help prevent migrating from one to the other and just changing the type of shopper rather than increasing customer base. purchase airline tickets. For example.com has the distinct advantage in this area. Finally.com plans to offer their customers over 900. etc.com and etoys. PROBLEMS WITH THE SITE 3 . email them to others.com had over 5 million visitors per week. but can then access their pictures from home.com company has a physical presence in these three states requiring sales tax collection. Wal-Mart.com sells nearly forty. The walmart. Another major flaw is that Wal-Mart. In terms of large screen televisions. This is a major obstacle for the offline giant to compete with the online giants such as Amazon. If customers are unhappy with their online purchases. Returns are another big challenge of e-commerce. view their photos online. For example. Wal-Mart is located in almost every U. Wal-Mart. The site offers an online travel agency that allows customers to make travel reservations.com does not have the required bandwidth capabilities to handle heavy traffic.com version however.com only sells four DVD players while amazon. The formation of the . Customers can sit at home and surf the site.com had roughly 400. the selection of merchandise is sparse. have them printed at any Wal-Mart worldwide and finally.com can capitalize here with its brand name recognition and notoriously lenient returns policy. which may be a deterrent to potential visitors. Utah and Arkansas.com are totally virtual. This means that sales tax would have to be collected on all purchases. a very popular video game. its website has several flaws. The . Being such a large international corporation.000 visitors per week whereas amazon. Wal-Mart. Customers still need to visit the store to drop off film.com ranks high in customer satisfaction. Consumers that are new to online shopping may be wary of purchasing from someone such as Amazon. Customers can drop off film at a nearby WalMart. state. According to Forester Research.com offers a challenge to Wal-Mart itself.
with relative ease. SUMMARY Wal-Mart has ignored the heated criticism of its delay into the e-commerce arena. a mail-order company. The website has to make the customer feel welcome and at ease shopping. Before diving in headfirst. packaging and shipping. Wal-Mart. trucking fleet as well as buyers. Many companies have gained a strong footing in the marketplace and pose a challenge to uproot them. Wal-Mart chose Fingerhut as their distributor due to the fact that Fingerhut is an industry leader in mail order distribution and catalog orders. etc. The trucking fleet is in place to deliver the goods to the storefronts. They are Wal-Mart employees working for the success of the company. Customers sit at home and point and click to purchase. They noted the importance of developing a solid strategy and of having the right people in place at the right time. ordering and shipping is all performed by outside sources that Wal-Mart must trust and rely upon. Wal-Mart did extensive research and put much thought into their plans and efforts in e-commerce. has been contracted to handle order processing. It is only logical that the world’s largest retailer should partner with the world’s largest mail order catalog distributor.. remained content to feel out the marketplace and determine what they felt their niche was. The warehousing. There are no brick and mortar storefronts. Skeptics in the financial arena as well as savvy consumers have been giving Wal-Mart a beating about it. touch. Fingerhut.com is a virtual company. Logistics are outsourced. WalMart. The stores have employees that can instantly answer questions as well as guide a person to the products being sought after. E-commerce basically throws this all out and starts from scratch. Wal-Mart is noted for its highly efficient stores. Books-AMillion for example.Multimedia Case: Walmart.com OPERATIONS Entering the e-commerce marketplace is a challenge to Wal-Mart as it is a totally new business strategy. and compare models. 4 . handles all the book orders. The importance of making a strong first impression was of utmost importance to Wal-Mart as the world’s eyes are constantly on them waiting to criticize any fault that may show through. The stores also have the benefit of being able to instantly provide the customer with the desired merchandise. The physical stores have all the merchandise laid out visually by sections and it is easy for a customer to navigate around the store.com does not have physical buildings with inventory. Distribution centers are necessary to have the product in stock as well as in transit to ensure that it is available to the customers. WalMart. distribution centers. however. They can look at. The site needs to be user friendly and easily searched for the goods the customer is looking for.