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1. Introduction:
Walmart (NYSE: WMT), the foremost physical retailer in the United States, has achieved
remarkable growth through its EDLP pricing strategy and customer-centric brand image.
Recent years have witnessed the retail giant's strategic focus on digitalization, aiming to
enhance sales and elevate customer service. While its global e-commerce sales continue to
surge, Walmart distinguishes itself with a comprehensive digital transformation strategy,
prioritizing superior associate performance, heightened customer satisfaction, and robust
financial returns. The integration of cloud technology plays a pivotal role in propelling this
transformation, aligning with industry trends. Walmart's CEO, Doug McMillon, underscores
significant milestones achieved through substantial investments in digital transformation,
with the company surpassing $100 billion in global e-commerce sales. This report delves into
Walmart's digital journey, examining key facets of its transformation, its impact on associate
performance, customer satisfaction, and its strategic use of cloud technology. Walmart's
outstanding performance in prominent online shopping festivals, such as Big Billion Days,
further underscores its digital prowess in key markets, including the United States, Mexico,
Canada, and India.
Inventory Management:
- Walmart relied heavily on manual processes for inventory tracking and management.
- Employees used pen and paper to record stock levels and sales data.
- Inventory levels were often inaccurate due to human error and lack of real-time data.
- Overstocking and stockouts were common issues, leading to inefficiencies and lost
sales.
In-Store Operations:
- Checkout processes were entirely manual, with cashiers scanning and keying in
prices for each item.
- Price changes and promotions had to be manually updated on shelf labels and point-
of-sale systems.
- Customer service relied heavily on in-person interactions and paper-based records.
- Workforce management, such as scheduling and task assignment, was a manual
and time-consuming process.
Customer Experience:
- In-store shopping experience was purely physical, with limited ability to
check product availability or pricing online.
- Online shopping and home delivery services were non-existent.
- Customer feedback and complaints were handled through traditional channels, such as
phone calls or in-person interactions.
Operational Efficiency:
- Walmart's operations were labor-intensive, with a significant portion of
tasks performed manually.
- Communication and coordination between different departments and stores were
often slow and prone to errors.
- Paperwork and administrative tasks consumed a substantial amount of time
and resources.
- Identifying and addressing inefficiencies or bottlenecks in processes was
challenging without data-driven insights.
1. Changing Demographics:
Evolving US population demographics, notably the dominance of
Millennials, necessitated a shift in Walmart's operating model.
Millennials, the largest segment, exhibit distinct preferences, requiring a tech-savvy
and digitally-driven retail approach.
6. Pandemic Acceleration:
The COVID-19 pandemic accelerated the urgency for digital
transformation, reshaping consumer buying habits.
The emphasis on online shopping and digital solutions became paramount,
prompting Walmart to prioritize digital initiatives to meet evolving consumer needs.
In 1996, when Walmart stood as the fourth-largest company in the United States, it
embarked on its first digital transformation. The retail giant introduced online platforms for
Walmart and Sam’s Club, an exclusive members-only retail warehouse division.
This initial move was more of an experiment than a full-fledged commitment to establishing
a lasting online presence. Walmart's CEO, David Glass, approached this cautiously,
anticipating that the online store might not surpass the sales of the prominent Sam’s Club
warehouse. With Walmart already achieving substantial $100 billion in brick-and-mortar
sales, Glass was not overly optimistic about the long-term potential of online retail.
Interestingly, Amazon, a future competitor, was then grappling with the challenges of being a
fledgling online bookseller, with a modest revenue of $148 million.
Despite these cautious steps, Walmart faced obstacles in its early e-commerce journey when
Amazon started recruiting key executives, including the software engineer crucial to
developing their website. This unexpected development posed a challenge to Walmart's initial
digital efforts.
However, despite these achievements, Walmart failed to fully leverage this growth. Amazon’s
substantial investment in their infrastructure overshadowed Walmart’s efforts.
Walmart's e-commerce platform maintained a simplistic and less efficient design, with search
engine results lacking precision (for instance, a search for "cotton socks" might yield cotton
candy and yarn). Seamless integration with stores and the broader supply chain proved
challenging for Walmart.
In 2010, Walmart initiated a digital revamp, establishing a global e-commerce division and
Walmart Labs—an incubator focusing on innovative digital products. Initially concentrating
on website enhancement, the lab developed advanced features like a search engine and
personalized mobile apps. Its scope expanded to include advancements in the supply chain,
cloud computing, and data analytics.
To fortify digital strategies, Walmart acquired tech startups, notably Jet.com, resulting in a
176% surge in online sales in three years. Despite successes, unprofitable ventures like
Bonobos and Modcloth led to Jet.com's closure and the sale of these acquisitions.
Collaborating with Microsoft, Walmart utilized cloud, IoT, machine learning, and
AI solutions for an enhanced shopping experience. Outsourcing finance and
accounting functions aimed at streamlining operations and reducing costs.
Through strategic acquisitions, partnerships, and outsourcing, Walmart speed up its digital
transformation, leveraging external expertise to fortify capacity and focus on pivotal
areas.
Walmart's e-commerce revival gained momentum with the success of their mobile app,
marking a shift from early experiments to impactful features. In 2014, the introduction of
Savings Catcher, comparing prices and rewarding customers for lower competitor prices,
propelled the Walmart app's user base from 4 million to 14 million in a month. Walmart Pay,
integrated with the app, allowed in-store payments via smartphones.
Capitalizing on this success, Walmart enhanced the in-store experience through the app,
introducing features like an updated store map and "Check Out With Me" for streamlined
purchases. By 2019, the app claimed the top spot on Black Friday, temporarily surpassing
Amazon in the U.S. mobile shopping landscape.
Despite its features, the app lacked a crucial function—groceries. Walmart addressed this
with the standalone Walmart Grocery app. During the COVID-19 surge, the grocery app
experienced a surge in downloads, prompting Walmart to integrate it into the flagship app,
offering customers a unified platform for all Walmart products.
Tightening of the Hold in Pandemic with Walmart+ and other initiatives: 2019
While the mobile app played a vital role in attracting customers.
Strategic Initiatives: They expanded their Buy Online, Pick up In-Store (BOPIS)
service to 1,000 locations, capitalizing on their extensive physical presence.
Walmart+ Membership: To rival Amazon Prime, Walmart introduced Walmart+,
offering unlimited same-day delivery for tech products and groceries at a $40
lower annual fee.
Enhanced delivery convenience: Walmart launched InHome, where vetted associates
enter customers' homes, placing products in designated areas like the fridge,
cupboards, or garage. To ensure security, associates receive one-time access and
wear body cams recording the entire delivery process.
In the realm of last-mile delivery, Walmart excels through its drone program, ensuring
deliveries within 30 minutes of ordering. Remarkably, Walmart achieved over 6,000
drone deliveries across seven states in 2022, surpassing Amazon, which reached its 100th
drone delivery in May 2023. This highlights Walmart's forefront position in pioneering
efficient last-mile delivery solutions.
This collaboration focuses on enhancing the digital experience for e-commerce retailers,
driving efficiency, and profitability across all channels. The alliance aims to elevate customer
experience, expand digital capabilities, and reinforce data analytics. Notably, Walmart gains
access to Salesforce's CRM platform, enhancing understanding of customer preferences and
trends.
5. Challenges Faced:
1. Competition from e-commerce giants like Amazon: Walmart faced intense
competition from Amazon, which had a significant head start in online retail and
was continuously innovating its e-commerce platform.
2. Unprofitable acquisitions: Among several acquisitions that were made for the
digital transformation by Walmart, some resulted to be unprofitable and were
offloaded by the organisation. Jet.com, Bonobos and Modcloth are examples of
such acquisitions.
6. Supply chain and logistics: Integrating online and offline operations, optimizing
inventory management, and ensuring efficient delivery posed significant
challenges for Walmart's supply chain and logistics operations.
Internet of Things (IoT) sensors for real-time inventory tracking and shelf monitoring
Autonomous robots for warehouse and distribution center automation
Computer vision and AI for self-checkout (Scan & Go app) and inventory management
Predictive analytics and machine learning for demand forecasting and supply
chain optimization
Omnichannel inventory management system for seamless online and in-store
integration
Automated pickup towers for online grocery orders
Voice ordering capabilities through partnerships (e.g., Google Assistant)
1. 74% increase in Walmart's online sales in Q2 2020 compared to the previous year.
2. 500% increase in click-and-collect grocery orders during the COVID-19 pandemic.
3.Up to 65% reduction in checkout time using the Scan & Go mobile app.
4.Improved inventory visibility and accuracy across channels
5.Enhanced supply chain efficiency and reduced operational costs.
6.Expanded customer reach through e-commerce platforms like Flipkart in India
7.Improved customer experience through personalized recommendations and
frictionless shopping
7. SMAC Implementations:
1. Social:
Walmart invested in social media platforms to engage with customers,
gather feedback, and promote its products and services.
The company leveraged social media analytics to understand customer preferences
and sentiment.
2. Mobile:
Walmart developed a robust mobile app that allowed customers to shop online,
view product information, locate stores, and access digital coupons and discounts.
The company implemented mobile payment solutions, such as Walmart Pay,
to streamline the checkout process.
3. Analytics:
Walmart implemented advanced analytics solutions to gain insights into
customer behavior, demand patterns, and supply chain optimization.
The company leveraged machine learning and predictive analytics to personalize
product recommendations and improve inventory management.
4. Cloud:
Walmart adopted cloud computing to scale its e-commerce operations and
enable greater agility and flexibility.
The company migrated its data centers to the cloud, leveraging cloud-based services
for various applications and workloads.
Walmart partnered with cloud providers like Microsoft Azure to enhance its
cloud capabilities and leverage advanced technologies like artificial intelligence
and machine learning.
Recognizing the importance of digital talent, Walmart has made significant investments in
attracting and retaining skilled professionals in areas such as data analytics, software
engineering, and digital marketing. The company has established dedicated training
programs to upskill its existing workforce, ensuring they are equipped with the necessary
digital skills.
In summary, Walmart's digitalization journey offers valuable lessons for businesses striving
to adapt to the digital age. By embracing data-driven decision-making, omnichannel
retailing, customer experience enhancement, innovation, and talent development, Walmart
has solidified its position as a leading retailer in the digital era. These lessons serve as a
blueprint for businesses seeking to navigate the ever-evolving digital landscape and remain
competitive in their respective industries.
9. Bridging the Gaps in the Transformation Journey:
In navigating its digital transformation, Walmart strategically addressed gaps through diverse
initiatives:
1. Strategic Acquisitions and Partnerships:
Walmart strategically acquired tech startups like Jet.com, Bonobos, and Modcloth,
rapidly expanding its online footprint. Collaborations with Microsoft and other companies
enriched the shopping experience through cloud computing, IoT, machine learning, and AI
solutions.
2. Outsourcing and Collaborations:
To enhance operational efficiency, Walmart outsourced functions like finance and
accounting. Collaborations with Salesforce integrated delivery services and order
management systems into Salesforce's e-commerce platforms.
3. Progressive Integration:
Adopting a progressive stance, Walmart bridged the gap between legacy systems and digital
technologies. This involved reconfiguring existing products and acquiring digital native
companies such as Jet.com and Flipkart to expedite transformation.
4. Dedicated Digital Teams:
Walmart established specialized teams like "Walmart Global Tech" to drive innovation and
explore emerging technologies. Teams focused on data analytics, supply chain, operations,
customer experience, and cybersecurity were instrumental in executing the long-term digital
strategy.
5. Phased Approach:
Walmart undertook a phased approach, commencing with omnichannel capabilities
and progressing through automation, analytics, personalization, experience
enhancement, and eventual ecosystem integration using technologies like blockchain.
6. SMAC Implementations:
By employing a multifaceted strategy involving strategic acquisitions, partnerships,
outsourcing, dedicated teams, a phased approach, and SMAC implementations, Walmart
effectively addressed gaps and navigated challenges in its digital transformation
journey.
Boost In-retail Efficiency: Expanding these technologies can help with inventory
management, cut expenses, and improve the overall shopping experience.
Walmart has focused on micro-fulfilment centres and automated storage systems
to increase retail efficiency.
New business opportunity: Walmart can use its current infrastructure and
customer base to venture into new opportunities and businesses to expand its
presence. This type of strategy has also been adopted by companies like Amazon.
11.Conclusion
Walmart, the world's foremost physical retailer, has adeptly navigated a remarkable digital
transformation, ensuring its competitiveness in an increasingly digital landscape. Faced with
shifting consumer preferences and the disruptive force of e-commerce, Walmart strategically
embraced digitalization, harnessing cutting-edge technologies and innovative business
models.
Cutting-edge technologies like IoT sensors, autonomous robots, computer vision, and
predictive analytics revolutionized operations. Real-time inventory tracking, automated
warehouses, and supply chain optimization increased efficiency and enhanced the overall
customer experience.
3. Which channels do you typically use for shopping at Walmart? (Check all that apply)
a) In-store
b) Online
c) Mobile app
d) Click and Collect
e) Other (specify)
5. If yes, how did you become aware of these digital initiatives? (Check all that apply)
a) In-store signage/displays
b) Walmart's website/app
c) Social media
d) Word of mouth
e) Other (specify)
6. Have you utilized any of Walmart's digital services or platforms? (e.g., online
ordering, mobile app, self-checkout, etc.)
a) Yes
b) No
7. If yes, which digital services or platforms have you used? (Check all that apply)
a) Online ordering
b) Mobile app
c) Self-checkout
d) Click and Collect
e) Other (specify)
8. How would you rate your overall experience with Walmart's digital services
or platforms?
a) Excellent
b) Good
c) Average
d) Poor
e) Very Poor
10. What are your expectations from Walmart regarding further digital
transformation? (Check all that apply)
a) Faster and more efficient checkout
b) Enhanced in-store navigation
c) Augmented/Virtual Reality experiences
d) Improved supply chain transparency
e) Other (specify)
11. Would you be willing to share your data (e.g., purchase history, preferences)
with Walmart if it leads to a more personalized and convenient shopping
experience?
a) Yes
b) No
c) Maybe
13. Please provide any additional feedback or suggestions you may have for
Walmart regarding their digitalization journey.