Digital opportunity looms larger
Increased attention was given to Walmart’s multichannel efforts in this year’s supplier survey — and for good reason. Amazon.com is now in a virtual dead heat with the dollar store channel in terms of the retailer/channel that suppliers view as the most significant competitive threat.
Walmart suppliers are right to be concerned about Amazon.com given the pace at which the $48 billion company, now the nation’s 10th-largest retailer, is piling on sales and expanding its reach into new categories. Walmart’s online sales now total $9 billion, as Neil Ashe, president and CEO of global e-commerce, revealed recently.
Despite their concerns, the digital arena is an area of great growth potential, and suppliers are excited about the prospect, with roughly 75% of those surveyed indicating they already sell products online. However, survey results also show a large swath of suppliers who registered a middling level of agreement with the statements “Walmart is headed in the right direction in terms of its online/multichannel strategic initiatives,” and “my team understands Walmart.com’s various strategic initiatives and priorities.”
That a higher percentage of folks didn’t register a stronger level of agreement in these areas should be a source of concern for Walmart.com as it has aggressive growth plans in place and will need the support of suppliers to execute its strategies.
An area in which Walmart.com should feel encouraged is that 18% of suppliers expressed the strongest level of agreement with the statement that they view Walmart.com as an integral part of the new item introduction process. Another 22% expressed the highest level of agreement with the statement that they are highly focused on growing with Walmart.com. Unfortunately, 21% of respondents also expressed the highest level of agreement that Walmart.com is challenging to work with.
While the signals are certainly mixed, it is perhaps understandable given that the pace of change in the digital world can make it difficult to keep track of what’s going on. It was only two years ago that Walmart intensified its multichannel focus with the creation of its global e-commerce group. Ashe didn’t join the company until this past January, and the recent analysts’ meeting was his first time presenting a comprehensive overview of the strategy. Ashe gave investors plenty to feast on — describing Walmart’s global network of 10,000 stores, 200 million weekly customers and a commitment to building a next-generation global technology platform to capture a disproportionate share of a worldwide e-commerce marketplace McKinsey & Co. expects to reach $1.3 trillion by 2015.
“It is a fascinating opportunity that we are uniquely positioned to take advantage of,” Ashe said, adding that he is focused on, “how do we do it differently and better than anyone in the world.”
Perhaps the most intriguing development to date is a pilot program involving same-day delivery in San Francisco, Minneapolis, Philadelphia and Washington, D.C. The program leverages Walmart stores in those markets as fulfillment centers for popular products with carriers executing same-day deliveries of orders placed before noon. According to Ashe, with 4,000 points of contact throughout the United States, the service is something Walmart is uniquely capable of executing, and he described the company’s store network as the envy of the e-commerce world.