World's Largest Retailer Deploys People and Technology in Online Battle with Amazon
While Amazon is pushing the boundaries of drone delivery to expand its leadership in ecommerce, Walmart's battle to catch up has led it to a lower-tech solution: have store employees deliver online orders to shoppers' doorsteps.
With 4,700 stores across the US and 90 per cent of Americans living within 10 miles of a Walmart outlet, "It just makes sense", Marc Lore, who leads Walmart's ecommerce operation, told reporters on the eve of its annual shareholders' meeting on Thursday.
The retailer, which employs 1.5m "associates" in its US stores, has been testing the system in three stores for about a month and has done "hundreds" of deliveries, with most arriving within a day.
Walmart's cut-throat battle with Amazon in shipping has already prompted it to test drones and other ways to deliver products faster, but the Bentonville-based retailer has focused on integrating its bricks-and-mortar business with Walmart.com and Jet.com, the ecommerce site Mr Lore founded.
Amazon Prime customers in more than 5,000 US cities can already receive online orders within a day, and in some locations within a few hours. Walmart has overhauled its shipping system to compete, offering free two-day delivery for orders over $35 and in-store pick-up of groceries and other online orders.
Walmart also announced plans on Thursday to ramp up the use of blockchain technology to "digitise food". The company recently completed a trial with IBM, using the technology to track food across its supply chain to help prevent disease outbreaks and improve shelf life.
The technology — an electronic ledger with records stored in "blocks" — allows Walmart to trace a package of sliced mango back to the South African farm it came from in two seconds, compared to a week under current systems, tests showed. Walmart said it was now talking to "big influential" food stakeholders and other large retailers to roll out the technology.
"Our intentions are to scale it," says Frank Yiannis, Walmart's vice-president of food safety.
The announcements, unveiled as thousands of Walmart workers from across the globe descended on its Arkansas headquarters for the company's glitzy shareholder week, are part of a push by chief executive Doug McMillon to position Walmart for the future.
Looking to brand itself as more of a tech group, Walmart has also introduced virtual reality for employee training and linked with car-sharing start-ups Uber and Lyft to deliver groceries.
Despite the upbeat tone and characteristically roaring shareholder week crowds, executives warned on the grim state of the industry. "There has never been a more disruptive time in the history of retail. We know there is no going back," Judith McKenna, chief operating officer for Walmart US, told an employee rally on Wednesday.
Retailers across America are struggling to adapt to a massive shift in the way people shop, but Walmart has delivered brighter news in recent months. Its US online sales grew by 63 per cent in its most recent quarter, their fourth straight quarterly rise.
While Walmart is the world's largest retailer and made $486bn in revenues in its past fiscal year compared to Amazon's $136bn, it is far behind in ecommerce. Amazon takes up a third of all US online purchases, and that figure is expected to grow to half by 2021, according to Needham & Co.
Walmart says that its new delivery programme is voluntary but employees will be paid extra for home deliveries and can choose to make as few as one or two deliveries per day as they drive home from work.
Walmart is the largest private employer in the US, and says that its employees earn on average $13.75 an hour. Activists and workers have targeted Walmart, saying it offers low wages and unpredictable hours.
Walmart has been on a buying spree to jolt its online sales and attract younger shoppers, buying Jet.com for $3.3bn last summer and niche websites including ModCloth, a women's clothing seller, and Moosejaw, an outdoor gear site.
Stock awards related to the Jet.com acquisition took Mr Lore's pay for the latest fiscal year to $244m, compared to $22m for Mr McMillon.
Walmart's push to "digitise food" comes as food-price deflation has squeezed earnings across the industry, hitting rivals such as Kroger, and as new entrants such as Aldi, the German discount grocer, risk accelerating a price war.
Walmart, one of America's largest sellers of groceries, has gone on the offensive, cutting prices to preserve market share. Groceries make up 60 per cent of its sales, a marked change from when it started out as a general merchandise store.
2017 E-Commerce Packaging & Logistics Technology Expo
8.29-31 Shanghai
Media contact:
ChinaPak Exhibition Services Co., Ltd.
Miranda Xu
Tel: 86-21-60531466
Fax: 86-21-22218271
Email: mirandaxu@msuccessgroup.com
沪公网安备 31010702006282号
