The Return of Walmart: Walmart’s E-Commerce Play

“If you don’t disrupt yourself, someone else will.”Peter Diamandis, Executive Chairman of the X Prize Foundation

Amazon has veritably changed the landscape of online marketplaces and e-commerce platforms, web services and consumer shopping habits. It’s fitting then, that Walmart — who had undisputably changed the brick-and-mortar retail game — has recently, aggressively re-aligned their e-commerce strategy. Though Walmart is late to the game, they’re performing considerably well in its attempt at catch-up, according to its first-quarter earnings, which were released in the second week of May.

Walmart’s biggest strength is the sheer size and cache of its physical stores. Understandably, the success of their stores played a large role in its belated entry into the e-commerce world. After all, why disturb the waters of online shopping when the company’s making a killing in the millions of physical stores it’s got around the United States?

However, as of late, Walmart’s made pretty substantial moves in the e-commerce space.

Recent Timeline of Events
  • August 8, 2016: Walmart acquires Jet.com and Jet.com’s founder Marc Lore becomes CEO of Walmart E-commerce
  • January 5, 2017: Walmart acquires online shoe seller Shoebuy.com
  • February 15, 2017: Walmart acquires outdoor retailer Moosejaw
  • March 17, 2017: Walmart acquires women’s fashion and accessories retailer ModCloth
  • April 17, 2017: Bloomberg reports Walmart is close to acquiring men’s fashion retailer Bonobos
  • May 10, 2017: Reports surface of Amazon deflecting the bots of several rivals, including Walmart
  • May 18, 2017: Walmart e-commerce first-quarter earnings released and they reported a net income of $3.04 billion as well as a 63 percent increase in digital sales.
Response to Acquisitions

Those acquisitions didn’t come quietly. The $3.3 billion Walmart shelled out to buy Jet.com was closely followed by the online uproar from ModCloth’s shoppers following the acquisition announcement.

Interestingly, the fine print in the acquisition press releases is that the retailers will continue to maintain distinct brands and leverage the connections and technology solutions from the acquired companies. Essentially, Walmart pinpoints what makes x platform successful and then scoops said platform under its e-commerce wing in order to inject Walmart with e-commerce vigor, reliability and performance.

For example, Jet.com was irresistible to Walmart because it’s an attractive brand with proven appeal to an untapped demographic base (millennials) with a tricky savings component to its checkout process that nicely aligns with Walmart’s savings’ bottom line.

In the cases of ModCloth and Moosejaw, both online retailers were rich with strong industry relationships and recognizable brand reputations. Walmart would be foolish not to reap those connections to influence, augment and enhance its burgeoning e-commerce strategy.

READ: Brick and Mortars Need an E-Commerce Mindset to Survive
Walmart Technology
  • Online grocery pick-up service
  • Shopycat app for Facebook
  • Walmart Pay
  • Walmart mobile app
  • Touch-screen endless shopping aisles
The State of Walmart Innovation

Walmart headquarters is situated in Bentonville, Arkansas, the site where it revolutionized the efficiency of its supply chain. Bentonville is where the superstore was born and bred, but now Silicon Valley is where Walmart’s tech team has gone to play. Both @walmartlabs — Walmart’s internal research lab — and Store No. 8 — an incubator of online retail for the mega-organization’s e-commerce arm — are situated in San Bruno, Calif.   

The quirkily named @walmartlabs focuses on building interesting and effective e-commerce technology for social and mobile. It’s primarily interested in research and development, but if said technology helps it get a leg up on rivals like Amazon and Target, so be it. After all, it’s at @walmartlabs that engineers built the Shopycat app for Facebook, which trawls through friends’ feeds to accurately predict what gifts users should buy for their friends.

Tech incubator Store No. 8 will be just as experimental as its titular precursor. The incubator was named after a Walmart store that founder Sam Walton used as ground zero to try out unexpected store layouts, new retail strategies and other innovative ideas. Seth Beal, senior vice president of Walmart’s digital, and Katie Finnegan, head of corporate development at Jet.com, are leading the Store No. 8 charge. Their focus is on creating new startups, exploring the potential of robotics, virtual reality and augmented reality and striking “strategic partnerships with other promising young e-commerce companies.”

Walmart knows its strengths and weakness, and it’s not taking any more chances on being left in the dust. Its investments and experimentation all revolve around updating Walmart’s strategies and technology to 21st century concepts like robotics, predictive analytics, machine learning and artificial intelligence.

READ: Virtual Collides With Brick and Mortar: Amazon Cash and PayPal My Cash
Final Thoughts

Walmart’s slew of acquisitions is very telling of Lore’s strategy. He knows that Walmart’s current brand isn’t a so-called “cool” one, and he knows that Walmart is desperately playing catch-up with expertise and experience in the e-commerce space. Brick-and-mortar retail is far different than e-commerce and for all of Walmart’s expertise in supply chain management, it severely lacked expertise in managing online strategy and categories.

Analysts are still scratching their heads at why Walmart would snap up smaller brands like Moosejaw and ModCloth instead of gargantuan online marketplaces like Wayfair. However, the mega-store’s first-quarter earnings are great and its upwards trajectory looks positive.

Sure, Walmart may have dug itself into a hole by refusing to expand its digital as early and as methodically as Amazon did. However, it does the heads of e-commerce injustice by theorizing that they’re trying too much, too fast, too late. Walmart’s already done the smart thing by not completely absorbing each acquisition: by keeping those brands distinct, Walmart can reap the benefits of industry connections. Additionally, Walmart can benefit from the smaller brands’ expertise and familiarity with the e-commerce terrain. Look at what Lore is injecting into Walmart e-commerce as we speak.

However, we can’t disregard the power of the brick-and-mortar store. Even online giant Amazon has physical Amazon bookstores now and it’s not even the first online retailer to expand into the physical storefront realm. The best thing that retailers can do is merge the ravenous online shopping habits of consumers with their desire for convenience (in-store returns, checking out the product before they buy online, etc.). And in brick-and-mortar strategy, Walmart has in spades.

We may currently be in the age of unicorns that eventually budge out or take over their competition, but we’re also in the age of killer startups. Walmart’s Store No. 8 venture is an incredibly smart move: it’s emphasizing partnerships and mentorships. Walmart is an enormous legacy company that is working hard to shed some of its outdated notions; its seemingly nonsensical e-commerce acquisitions may sow many fruits. Only time will tell.

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