Walmart's Shift From Bricks to Clicks

8/3/2015
Mega retailer Walmart has seen a significant pattern change in senior management in recent years. First, Doug McMillon, the youngest CEO in the company's history took over. Most recently, Greg Penner was voted in as chairman of the board.

Why the change? Simple. Both are young, relatively speaking, and have a long history both with Walmart, and perhaps most important, in e-commerce. And for Walmart, the change will be less on the side of the product offerings, and more so in how these products are offered. The fact of the matter is that although the company ranks at the top in retail revenues with more than $1 billion in sales per day (a threshold achieved back in 2001), Walmart only has one sixth of the online order volume that Amazon has. That is to say, Walmart might be great at offline but hasn't not mastered online.

How will things change now? I believe it is best summed up when McMillon said the following: "I want us to stop talking about digital and physical retail as if they're two separate things."

Yes. The expectations of consumers have changed, yet Walmart's business has remained focused on the same: in-store. But in-store is online, and online is in-store. The on-demand economy is here.

This is something that service providers including Bindo have been focusing on for quite a while. A retail location is more than just a destination where consumers browse and shop. Physical stores also serve as localized fulfillment centers wherein consumers can see exactly what inventory each location has and can place the purchase, knowing they will get their products within the next day or two.

In essence, one store is a node with stored information. Nothing new here. But what will be new is the way that each node is connected and made available to the everyday consumer. With operations that have large geographic distribution, Walmart has the ability to provide a widely distributed consumer experience with real-time on-demand shopping that is both personalized and localized.

McMillon has started the conversation pointing in the correct direction, whilst Penner has the tech and startup-mentality experience during his time as a general partner with Madrone Capital Partners, a San Francisco venture capital firm. Now the question will be how will they implement the plan? With Walmart's resources at their command, the major question is not "what can be done,” but rather "what can't be done."

Imagine the opportunities at hand. An on-demand one- to two-day shipping model, akin to Amazon, but with potentially lower prices (which will trigger a pricing war with the online mega-retailer). As well, Walmart could offer one-hour delivery services within selected geographic regions. No small logistical feat, of course, but it's something that absolutely can be accomplished.

How about inventory as a platform?

What if Walmart created an open API that allowed other platforms/services to plug into its vast inventory resources, and allowed them to sell directly through the Walmart infrastructure? This is just the beginning in thoughts towards the race to the top.

It is no simple feat, but Walmart's newly minted CEO and even more newly appointed chairman have their sails pointed in the right direction aboard one of the largest and most capable ships available. Now it is simply a matter of self determination and tact in implementing this new customer-centric, data-driven on-demand world of retail. With the right people, platforms and expertise, Walmart might be able to accomplish exactly what it sets out to do: bridge the gap between offline and online commerce and provide the retail experience of the future.


David Bozin is vice president of business development for Bindo, a retail technology company headquartered in New York City.
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