Walmart’s Acquisition Strategy to Stay Competitive

Walmart has lagged e-commerce competitors such as Amazon. With the acquisition of, Walmart hopes to leverage's e-commerce and digital expertise to remain competitive.

Changing Landscape

As of Q2 2016, U.S. retail e-commerce sales (seasonally adjusted) experienced 16% year-over-year growth compared to total retail sales which saw 2% year-over-year growth.[i] With recent expansion of the e-commerce sector and expectations for sustained growth in the future, Walmart has recognized the importance of adapting its business and organizational model to the digital landscape.

Expansion of E-Commerce Platform

Walmart has introduced many digital platforms to expand its e-commerce presence including Walmart Labs to manage Walmart’s broad e-commerce platform; a “Marketplace” that allows third-parties to sell merchandise on; “Walmart Pickup,” “Pickup Today,” and “Online Grocery” that makes shopping more accessible and efficient; and 13 dedicated e-commerce fulfillment centers in the U.S.[ii] Walmart is committed to adapting to accommodate the changing landscape and in fiscal year 2016, Walmart invested an incremental $296 million (compared to 2015) in e-commerce.[iii]

Acquisition to Adapt

However, Walmart’s expertise in brick-and-mortar stores has limited its ability to compete with e-commerce giants such as Amazon. In Q2 2016, grew only 7% which lagged e-commerce competitors.[iv] Amazon has superior data analytics and is a more agile and nimble company relative to Walmart.[v] In order to compete with Amazon, Walmart recognized that it needed to look externally for support and expertise. In August 2016, Walmart acquired for $3.3 billion in the largest purchase of an e-commerce startup in the U.S.[vi] Walmart believes that this acquisition will “complement the significant foundation already in place to serve customers across the Walmart app, site and stores and position the company for even faster e-commerce growth in the future by expanding customer reach and adding new capabilities.”[vii] With the acquisition of, Walmart will be able to leverage’s e-commerce capabilities including its algorithm for bulk buying as well as its customer base. Additionally, Walmart will benefit from the expertise of the executive team including Marc Lore, a serial entrepreneur with immense e-commerce experience who will now run[viii]

Future Digital Growth

As the acquisition of is the largest e-commerce startup acquisition in the U.S., it will be interesting to see how the integration of the two companies unfolds. Will Walmart be able to extract significant synergies from to provide value to its customers? Will make Walmart a more agile company? Will they be cultural complements? Assuming the integration of Walmart and is successful, Walmart should continue investing in other companies to improve and expand its e-commerce platform.

Additionally, Walmart currently has 85 million unique visits per month (which will likely increase with the addition of’s user base).[ix] Walmart should work on using data from its visitors and customers to improve its offerings and increase revenue, perhaps from personalized advertisements or other targeted marketing methods.

Walmart should also consider expanding its fulfillment and distribution centers. Currently, it only has 13 dedicated e-commerce fulfillment centers in the U.S. compared to Amazon that has over 70 million square feet of fulfillment centers, which, if you aggressively assume the average warehouse size to be 1 million square feet, equates to 70 centers.[x] Walmart should invest in expanding its fulfillment centers so it can speed up and make the delivery process more efficient. Walmart should investigate last-mile delivery options. Walmart has started discussions with Uber, Lyft, and Deliv for last-mile delivery of grocery products, but Walmart should start focusing on expanding its last-mile delivery options more broadly across all product types.[xi] Amazon has recently introduced “Amazon Flex” and “Amazon Prime Now” which allow customers to receive their products in as little as an hour.[xii] In order to compete with Amazon’s last-mile delivery products, Walmart must spend significant capital expanding its offerings through the last-mile delivery channel and its relationships with Uber, Lyft, and Deliv. While it will be challenging to compete with e-commerce giant Amazon, it will be critical for Walmart to be innovative and adaptable to remain competitive.  (799 words)

[i] “Quarterly Retail E-Commerce Sales 2nd Quarter 2016.” U.S. Census Bureau, U.S. Department of Commerce, August 16, 2016, Washington, D.C.

[ii] “Walmart 10-K 2015.” January 31, 2016.

[iii] “Walmart 10-K 2015.”

[iv] Picker, Leslie et al. “Walmart Rewrites its E-Commerce Strategy with $3.3 Billion Deal for” DealBook – New York Times, August 8, 2016.

[v] “Walmart and The Marriage Won’t be Easy.” Forbes, August 22, 2016.

[vi] Nassauer, Sarah. “Wal-Mart to Aquire for $3.3 Billion in Cash, Stock.” Wall Street Journal, August 8, 2016.

[vii] “Walmart Agrees to Acquire, One of the Fastest Growing E-Commerce Companies in the U.S.” Walmart News, August 8, 2016.

[viii] “Walmart Rewrites its E-Commerce Strategy with $3.3 Billion Deal for”

[ix] “Walmart 10-K 2015.”

[x] “Amazon 10-K 2015.” December 31, 2015.

[xi] Bender, Michael. “Piloting Delivery with Uber, Lyft, and Deliv.” Walmart Blog, June 3, 2016.

[xii] Ganapathy, Venkatesh. “The Uberisation of Supply Chain.” SIBM Pune Research Journal, Vol X, 26-31, June 2016.


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Student comments on Walmart’s Acquisition Strategy to Stay Competitive

  1. I agree that acquiring more e-commerce companies like can help Walmart to rapidly improve their digital expertise. One other major strategy that Walmart is employing to address the disparity between their e-commerce fulfillment centers and those of Amazon is fulfilling online orders out of their stores. From 2012 to 2014, utilization of the ship-from-store program improved Walmart’s shipping speeds by 15% (1). So while Amazon’s traditional e-commerce fulfillment warehouse network dwarfs that of Walmart’s, Walmart has thousands of potential mini-fulfillment centers throughout the country in the form of stores. By enabling ship-from-store, Walmart can ship goods to customers from the store across town rather than from a fulfillment center half-way across the country.

    (1) Shelly Banjo, Suzanne Kapner, and Paul Ziobro. “Can Wal-Mart Clerks Ships as Fast as Amazon Robots?” The Wall Street Journal. December 18, 2014., accessed November 20, 2016.

  2. Some thoughts on Walmart’s challenge to solve the Last-mile problem. As reported recently on the Washington post, Walmart is actually planning to come at the problem from a very different direction – leveraging their 11,000 plus physical stores across the world – an asset neither Amazon nor Google, Uber, Lyft have. By both controlling almost the whole value chain of grocery pickup/delivery, Walmart has an opportunity to be more efficient, keep costs down, control quality from suppliers, and reach the “burbs” – something Amazon (even with transport partners) will have to spend a lot of money on, in order to compete.


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