Walmart working with Uber; Two Giants Join Forces
As it strives to maintain its global leadership, Walmart has joined hands with ride-sharing giant Uber, among other technological advancements.
A perennial Fortune 500 leader, Walmart has built a retail empire predicated on a business model that offers customers a wide assortment at everyday low prices (EDLP). This customer promise is backed by an operating model focused on buying merchandise at scale, fiercely negotiating pricing and maintaining a lean supply chain. The rise of technology has allowed Walmart to adapt this business model, the impact of which is most evident in its eCommerce business.
At ~$14 billion in annual revenue, Walmart’s eCommerce business is one-eighth the size of its most direct competitor’s, Amazon . Despite the growing online industry, Walmart.com has experienced slowing growth in recent quarters (see Figure 1 below) .
Figure 1- Walmart’s eCommerce growth 
To compete, the company has been taking a series of digitally-focused actions, the most extreme of which was this summer’s $3.3 billion acquisition of Jet.com, the largest eCommerce acquisition in recent history (see Figure 2 below) .
Figure 2- Largest eCommerce acquisition exits since 2009 
This acquisition furthered Walmart’s ability to offer EDLP by embracing Jet’s Smart Cart algorithm. Examples of Smart Cart passing savings on to the customer include the algorithm reducing the price on items in the same warehouse as items the customer has already added to their basket or reducing price if the customer relinquishes their right to return an item (see Figure 3 below) .
Figure 3- Jet.com’s Smart Cart technology 
With two-thirds of the U.S. population living within 5 miles of a Walmart , a key component of the customer promise is convenience. To better offer convenience online, Walmart is leveraging Uber and Lyft’s on-demand ride-hailing technology to deliver products to customers instantaneously. Through this partnership, customers place orders online and store employees pack the order and use the on-demand technology to hail a taxi that delivers the goods . Finally, Walmart Labs, a standalone division of the company, is helping advance the retailer’s digital capabilities by “building the next generation of innovations that will influence the behavior of shoppers” (Meet Anand Rajaraman, Sabharwal, 2011) . One such innovation is Shopycat, a Facebook app that uses social media profiles and comments to generate gift ideas . This technology helps Walmart.com customers find products efficiently (see Figure 4 below).
Figure 4- Shopycat screenshot 
Digital technology has also helped develop Walmart’s operational model in-store. In a recent pilot, the retailer partnered with General Electric to install iBeacon technology into overhead lighting. This technology uses Bluetooth communication with customers’ mobile devices to strategically serve up special offers depending on the customer’s location in the store . Additionally, Walmart has rolled out Walmart Pay to all regions, which enables customers to pay at checkout by scanning a QR code (see Figure 5 below), reducing wait time at the cashier. The technology requires use of the Walmart app, which opens up a new avenue of communication with the customer. Through the app, Walmart can better hone customer data to “push” customized content and offers, enhancing the company’s ability to serve its consumers effectively .
Figure 5- Walmart Pay 
Despite these technological advancements, Walmart has an opportunity to adopt digital innovation to an even greater extent to better serve the customer. Walmart can better direct the online customer to product they want at a price they want through the use of Google’s local inventory ads. These ads allow customers to find product at a store nearby and provide price transparency, thereby ensuring the customer can find a low-price that suits them before leaving the house. Walmart briefly experimented with this technology in 2015 but has not embraced it at a large scale . In-store, Walmart can integrate visual search into its app, through a company like Slyce. This technology allows customers to take a picture of a product and match it to merchandise in a retailer’s catalog. If used at the shelf, customers could attain more information on the product and potentially, see special offers, arming the customer with more information before they buy . Finally, Walmart can experiment with “smart shelves”, a technology already embraced at many major retailers. Smart shelves digitally display pricing information at the shelf and allow customers to “click” through to additional detail, like nutritional information (see Figure 6 below). These shelves also have weight sensors that send signals to store employees as inventory runs low . Such technology would allow Walmart to ensure customers can always find product in-stock with the information they need before purchasing.
Figure 6- Smart shelf technology at Kroger
Walmart has taken great strides to enhance is online and in-store operating model and better deliver on its customer promise by adapting digital technologies. As competition continues to grow fierce, the retail giant will need to continue taking advantage of innovation to maintain its position at the top. (799 words)
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Student comments on Walmart working with Uber; Two Giants Join Forces
Wow, Walmart seems to be throwing a ton of digital strategies at the wall just to see what sticks… I found the acquisition of jet.com fascinating given what it enables Walmart to do on the backend. The potential cost savings even from the two examples you mention (no returns, same warehouse) are huge, but I could imagine it could also unlock other savings when customizing baskets for known shopper patterns or volume discounting.
One thing I do find disconcerting is that nearly every major company out there is feeling the need to do a private label version of Apple Pay in order to get more consumer data and drive people into their apps. I think this is a big and costly mistake. Most of these companies do not have the capabilities in house to deliver on a seamless customer experience, nor are they focused on UI. Consumers will hit a saturation point where they just won’t download yet another payment app, instead insisting late players like Walmart adopt some other platform. I think this would have been an opportunity for a high-profile partnership with a PayPal/Venmo/etc to enable the same end without expecting consumers to establish yet another new behavior pattern.
I am definitely intrigued by Wal-mart’s partnering with ride sharing services to deliver orders to customers. Seems like a great way to take advantage of a large footprint of brick-and-mortar stores and leave the logistics to other companies. I’ve seen similar transitions within the grocery industry as retailers are deciding to partner with third-party services to do the order picking and/or delivery. It’s an interesting move to compete with delivery service that is getting ever faster with Amazon Prime and Prime Now.
Thanks for the wisdom, Ronnie. It would be interesting to see if Wal-Mart is looking into ways that it could better understand customer intent before they walk into the store. Maybe they can develop an app-based shopping list creator where users can upload a shopping list prior to going to Wal-Mart. With more advanced notice, Wal-Mart could help guide customers around the store and towards certain products that they didn’t previously consider. It could also provide Wal-Mart some great insight if customers had an item on their list but didn’t end up buying it. How did the store miss out on that profit?
Not sure if the typical Wal-Mart customer would actually use an app-based shopping list, but hey, I’m an ideas guy.
Thanks for the post. I think it is really interesting to think about how Wal mart is pushing into digital given their dominance stems from their physical brick and mortar stores. How will they be able to leverage their core competencies in physical brick and mortar stores and translate that into e commerce? E commerce has historically been a huge focus for Wal Mart – they tried to acquire diapers.com before getting out bid by Amazon. Since they lost out on acquiring diapers.com, I bet wal mart did not want to miss out on acquiring Jet.com
Given all the different initiatives they are undertaking, I am worried they may not know exactly what they are looking for and could cause them to suffer in the short term. I guess they want to be prepared in case the digital e commerce move goes in a different direction than what they were expecting. It will be interesting to see how they integrate jet.com into their own platform and the potential synergies associated with fulfillment and purchasing. Will consumers still utilize jet.com now that they are owned by wal mart?
Thanks for the great post, Ronnie! I wasn’t aware of WalMart’s Uber partnership but this certainly seems like a relatively easy and smart path forward to begin capturing share of this new eCommerce market. One question that I had (and something we talked about often at PepsiCo as well) is what happens to EDLP in a world of price transparency? I imagine WalMart is already working against this but, at least as first glance, it appears to be a major challenge for their customer promise in a world with greater price transparency where consumers can know how much any item costs at any retailer in a ten-mile radius. Clearly, we’re not there yet but this reality may not be too forward-looking. I suppose as long as WalMart maintains at least the cheapest basket of goods, they can still deliver on their promise but price transparency does threaten to increase the level of perceived commoditization and risk of retailers competing even more on price in pretty much all categories which would be a huge challenge on margins for retailers (and CPGs like PepsiCo too).
Thanks for the post Ronnie. My biggest take-away, Wal-Mart’s digital strategy is always a day late and a dollar short. Everything Wal-Mart does seems to be a reaction to Amazon. It started with e-commerce, then moved to two-day shipping, now it’s leveraging Uber and Lyft, which is reaction to Amazon’s promise on a two or one hour delivery window. I personally believe Wal-Mart waited too late embracing technology and its days are numbered. It’s such a large (old) organization, that it’s not agile enough to adapt to the Internet age.