An overview of Walmart’s multi-channel journey
The retailer has transformed itself to be leader in global multi-channel retailing
While Walmart’s second quarter results shone a light on the challenges it is facing–at home and internationally–as consumers maintain a cautious approach to spending, the results from its global e-commerce initiatives demonstrate the importance of its transition to a being a multi-channel retailer.
This is most obvious when looking at the numbers. Its e-commerce sales have increased by over 30% globally over the first half of the year, and although the acquisition of Yihaodian in China has made a major contribution, this is a significant level of growth for a business that is forecast to generate sales of more than $9 billion this year.
Investing at pace to build multi-channel capabilities
To deliver this type of growth, investment has been made at pace. Much of this has been channeled through its @WalmartLabs division which sits within its Global E-commerce unit in San Bruno, Calif.
The goal of this division, almost like some form of incubator, is to transform Walmart to be an innovator at the intersection of social, mobile and retail, and set it on the path to being a leader in global multi-channel retailing.
Acquisitions have been a key element to both establish and grow this operation, helping to both enhance Walmart’s technical capabilities and attract some of the best talent in the field.
Prioritizing investment in the U.S., U.K., Brazil and China
Walmart’s multi-channel approach is brought to life in markets such as the U.S. and the U.K., two of its more mature e-ecommerce markets. The retailer is making significant efforts to integrate its e-commerce platform with its stores with the aim of delivering a continuous, seamless channel.
In the U.S., around 40% of its online orders interact with its stores in some form. This may be through its site-to-store click and collect service, which also now includes a test of pick-up lockers in the Washington, D.C., area, pay-with-cash, and delivery from store. It has also recently expanded its ‘Scan and Go’ test, an initiative that has the potential to transform the in-store experience for its shoppers.
In the U.K., Asda Walmart recently opened its first remote pick-up location for online orders and launched a dedicated tablet website for its non-food business, the first major U.K. retailer to do this. Sales were strong in the quarter, up by over 16%, demonstrating that even in more established e-commerce markets, high growth rates are being achieved.
The two other markets which have been prioritised for e-commerce growth are Brazil and China. In Brazil, Walmart’s site is now the most visited in the country, and sales are up by more than 50% versus last year. A similar story is playing out in China, where Yihaodian is one of the fastest growing e-commerce businesses in the country, helping to drive double-digit sales growth.
So, in a relatively short period of time–global e-commerce was only established as a business unit within Walmart in 2009–the retailer has made quite a lot of progress through better leveraging its scale and taking best practices from across its various markets. But the story has only just begun.
Developing next generation fulfillment networks
There is some still way to go in terms of developing its global technology platform which will make some of that best practice sharing much easier to achieve. The retailer is also focusing on developing what it calls its ‘next-generation fulfillment network’. This is about better integrating its stores, distribution centres and supply chain to add value, while also optimising costs.
The potential for online groceries in the U.S., and Canada
If any question marks remain about Walmart’s multichannel potential, it is about the scope for online grocery delivery in the U.S. Its test in San Francisco has been running for a number of years, and while this is not often referenced, the last set of results provided an interesting perspective.
While no specific results were shared, Walmart highlighted the high customer satisfaction ratings the service is achieving, noting that 83% of its customers would recommend Walmart grocery delivery, noting that “we’ve proven we can successfully use a supercentre for online grocery delivery.”
This is interesting as it suggests that Walmart now has a model which can work at the local level in the U.S., building on the success that Asda-Walmart has achieved in this channel in the U.K.
Scaling it up and replicating it in other geographies however, comes with its own set of challenges. Success in the U.S. though, could also provide the foundation for a push with groceries online in Canada, enabling Walmart to continue growing its share of the food and grocery market here.
While this may be some way ahead, as Walmart gains further scale and capability in multi-channel retailing globally, what will change will be the pace at which it will be able to deploy various solutions and models across different markets? Walmart could move quickly once it decides it has a model that will work.