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Walmart Reshapes Its Ecommerce Strategy

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Walmart Reshapes Its Ecommerce Strategy

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  • April 2, 2013
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Wal-Mart planning to reshape its e-commerce strategy, aiming to reclaim declining customer base which in recent years has shifted toward online shopping.

E-commerce companies like Amazon and eBay have captured large segments of retail market share that industry leaders like Wal-Mart once held. The sales for the last 16 weeks ending in April are relatively flat compared to the year-ago quarter. Wal-Mart just realized that having a broad physical stores isn’t enough anymore today as e-commerce rises.

Specifically, Wal-Mart announced it will begin a test this summer that will allow consumers to pick up online orders in lockers at Wal-Mart stores. It will also be testing a service similar to one that Amazon has in which orders can be delivered to convenience stores and some Staples and RadioShack.

They also introduced a new technology platform called Wal-Mart Global ecommerce, which is designed to connect customers worldwide with the broadest possible range of products.

The executives expect the online operation will produce at least a 20% return on invested capital.

Analysis:
In order to sustain a competitive advantage, any fit between a firm’s internal strengths and the external environment must be dynamic. As the customer base shifts toward online shopping, Wal-Mart decided to reshape its ecommerce strategy and to go social as the rise of ecommerce. Therefore, Wal-Mart does a good job of adjusting its strategy to match changing external environment. By doing this, Wal-Mart will be able to sustain its competitive advantage in both physical stores and ecommerce channel.

Also, as the industry develops, process innovation is more important than simply product innovation. Wal-Mart’s series of ecommerce actions are parts of Wal-Mart’s process innovation because those activities will provide convenience and customization.

On the other hand, the e-commerce operation is not yet profitable. First of all, the strategy is a kind of incremental...