By: Matt Lemen, Kevin Carmody, Adam Giesegh, and Brian King
In this paper our group explores the many ins and outs of the huge business Walmart and its online presence through Walmart.com. We start off our project buy looking at Walmart through the Porter’s five forces analysis. Porter’s five forces analysis allows us to take a closer look at what it would take for a new company to come into the market with Walmart, possible alternatives to shopping at Walmart, how much power consumers have over Walmart’s business plan, what role Walmart’s suppliers play in the company, and how Walmart measures up against the rest of the market. This is done to establish a current market situation analysis so that a general background of Walmart is given before getting into specific details in the e-commerce plan. Next our group discusses what keeps Walmart focused on developing their e-commerce into what it is today, as well as the rationale for doing so. It is in this section of the paper that our group covers the introduction of the Walmart application for smart phones as well as the positives it provides to consumers using it. We talked about the Walmart application to drive home the fact that Walmart e-commerce is ever changing to keep up with current consumer trends which include shopping convenience and even the emerging smart phone craze currently going on. The paper is concluded by our group taking an overall look at everything Walmart.com has going on as well as how it’s come along since its creation to provide a little further in depth understanding of why and how Walmart is trying to capture more online consumer market share. Also in our conclusion of this report our group came up with some creative ideas to expand on Walmart’s e-commerce to drive them to the number one spot over Amazon and eBay. Our recommendations included going in and improving servers for the Walmart.com store and the Walmart app and more online personalization.
Porter’s Five Forces
Walmart.com is in the industry NAICS code 454111. They define it as a store retailing or a combination of store retailing and Internet retailing in the same establishment. In short the industry is bricks and clicks.
Anyone can sell products on the internet; all a person would need is a site and a product to sell. It is a little harder to compete on the business level of Walmart.com. To be known as a price leader and sell a large amount of different products gives Walmart.com an advantage. Most other firms with a physical location also have a site where consumers can purchase products. A large amount of capital is needed to sell a large variety of goods which could be a barrier of entry to some lesser companies. Another reason that the threat of new entrants can shake the industry is because of the low switching costs. Consumers search the web for the product they are seeking which sometimes involves pre-research and other sites checked. The consumer has an evoked set of sites they will purchase goods from. Switching between sites is not a problem for the consumer as long as they can rationalize the reason for switching (better price, better company, etc.). The only cost to the costumer is the time and energy spent to search for the better deal. To the consumer saving a few dollars would be enough to search for the better deals. The threat of new entrants has to be low to medium which is good for Walmart. Also since the industry deals with technology, a change could be made that reshapes the industry as we know it today which could be for the better or worse for Walmart in the long run.
The treat of a substitute is high. There are other pure play sites that people will go to when searching online, Amazon.com, ebay.com, and others. Amazon.com had 20% of all online sales during June 2011...