Wal-Mart is a world-wide active American retail trade company and currently the largest retail company in the world. Beginning in 1962, Wal-Mart has made the transition from a small firm in Arkansas to the largest employer with 3, 800 store units in the United States with record revenues today. But nevertheless, since Wal-Mart launched its online branch, it had to suffer from substantial setbacks from competitors such as Amazon.com or Ebay. The intention of this case study is to evaluate Wal-Marts.com's profitability of success regarding its situation in 1999.
II. Discussion Questions
II.1 What is the impact of Wal-Mart.com on customer-borne transaction costs?
Wal-Mart's business philosophy is based on the simple idea, Sam Walton had in mind, when he first founded his business making the customer No. 1. It is Wal-Mart.com's goal to bring this culture and philosophy to the Internet. Wal-Mart.com is very ambitious to combine technology and world-class retailing in order to give customers a wide product assortment, "every day low prices", guaranteed satisfaction, friendly service, and convenient shopping hours 24/7. With the launch of Wal-Mart.com consumer-borne transaction costs can be reduced: (1)
By minimizing the expenditure of time consumers would spend on driving to a Wal-Mart store in their surrounding area, the time spent in line and the time needed to return to their homes. We all know that time is money and so this economy of time stands for a considerable reduction of consumer-borne transaction costs. (2)
By implementing a product search engine, which will make it easier to find the desired products and (3)
by offering the possibility to pick-up and to return products that were ordered online at any nearby Wal-Mart store, which implies cutbacks in negotiation efforts. Although Wal-Mart.com has the opportunity to reduce consumer-borne transaction costs in different ways, it has to keep in mind that consumer-borne transaction...
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