Walmart’s new CEO aims to trump the online behemoth that is Amazon
Walmart may dominate the US landscape when it comes to superstores and grocery, but online is a different story; it’s home to it’s largest nemesis: Amazon.
While Amazon can sit pretty, feeling safe that Walmart won’t manage to graze it’s eCommerce model for the next year or two. Walmart has set its sights on beating off the brick-and-mortar competition, while also heading to the top of the online food-chain.
The new CEO of Walmart, Doug McMillion, steps in on February 1st and has the intention of going after the big dogs. He’s got a long way to go though, and after some of the efforts he displayed in Walmart’s international arms, it’ll certainly be a tough struggle.
Firstly, Walmart plan to reduce store sizes in new stores, aiming to open them in cities and create convenience centres to combat low-cost dollar-stores. Think of these as more European outlets, such as Tesco Express or Spar. It’s a worrying tactic though, seeing as Tesco floundered in the States due to offering smaller convenience stores.
But Walmart has something up its sleeve, and it’s all to do with Omnichannel and distribution.
Walmart plans to pull together its shops, allowing them to become “market ecosystems” that’s nearly unmatchable due to the combination of shops, warehouses and delivery fleets that the company operates nationwide. The ideas is that deliveries will go to multiple stores, ensuring that lorries and vans are full instead of near-empty when stocking up stores. Walmatrt is also rolling out a previously trialled system whereby a customer can order goods to their nearest store and just pick it up on their general shop. So far, this idea of delivering to the smaller stores has seen sales of certain goods increase by 35 per cent, according to Bill Simon, former head of Walmart’s US operations.
There’s still a way to go on the eCommerce front though. Here Walmart aims to reduce the cost of customer fulfilment even more. So far ordering from Walmart.com costs Walmart nearly twice as much to ship goods as it does for Amazon. This can easily be reduced, and the demand for goods is clearly there, with the company banking $10 billion in 2013 through eCommerce – conversely, Amazon took home $75 billion.
But all is not lost here. Walmart.com has been working with independent sellers and manufacturers to sell unique goods, a little bit like Amazon allows merchants to sell their goods online too. In doing so, this has increased its catalogue to 5 million goods online. It’s even better that WalmartLabs is helping produce applications that let customers order goods while in store, or scan and pay for goods on the go, speeding up the process of shopping.
Walmart certainly has a long way to go to get what it wants, but with their new strategies, and Doug McMillion at the helm, it seems like there could be a change coming.
[Image: zayre88 – Flickr]