Wal-Mart's Business Strategy in eCommerce: The Role of IT in Business Solutions

Topics: Electronic commerce, Wal-Mart, Online shopping Pages: 6 (2183 words) Published: November 5, 2015
How IT helps to address challenges now and/or in the future Wal-Mart, the world largest retailer, is facing the new challenges at a time when low prices and one-stop shopping can be a few clicks away on a tablet computer or mobile phone. (Anne D'innocenzio. 2014). With the great development of Information Technology, Wal-Mart needs to develop the latest technology to survive in the competitive business environment. This part analysis how what challenges that Wal-Mart are facing right now and how information technology can help the company to solve these problems. What challenges

There are three main challenges that Wal-Mart are facing: price pressure, changing shopping habits of customers, and Wal-Mart is surviving in the Amazon’s shadow. One of the representative feature of Walmart is its low price. Since Wal-Mart built its reputation on everyday low price, which attracts a lot of low income people. These customers prefer to choose low-price products. In addition, until now, “Wal-Mart has been able to make huge profits by keeping worker wages low and using its size to negotiate cheaper prices than competitors”. Brian Sozzi at The Street writes. However, since the economic recovery, Wal-Mart is not the only store provides the low price products. Other stores such as dollar tree, 99 cents only store, and some grocery stores are the main competitors of Wal-Mart. The competition is becoming intense. Moreover, large size of the store is not the advantage for Wal-Mart any more. Customers are tired of searching one product that they need in the whole large store. People are looking for a faster, convenient, and direct way to shopping. As a result, Wal-Mart has had to focus more on cutting its prices. The move that Wal-Mart did is that using Wal-Mart's Savings Catcher, an online tool that customers can compare Wal-Mart's prices with other stores’ price. If a lower price is found elsewhere, Wal-Mart refunds the difference in the form of a store credit. Low prices hurt sales and margins. For the latest quarter that ended on May 2, for example, sales at Wal-Mart's U.S. stores fell 0.1 percent. Another challenge that Wal-Mart is facing is customers’ shopping habits is changing. It is the new trend that people are prefer shop at home or make the order online and pick up at the physical location. It is more convenience than strolling in the large store to search the product. People are willing to make quick trips for food and drinks or other specific products they need. That is the reason why the number of convenience store such as Seven Eleven and Circle K are increasing recent years, even though they have higher price than Wal-Mart. These tiny convenience stores help people save time, saving time is more important than saving money some time. Customers are also tired of long waiting lines of Wal-Mart checkout station. Wal-Mart is planning open 270 to 300 small stores. Moreover, with the increase number of online shoppers, Wal-Mart is shoring up its online business. Amazon, an online book store two decades ago. Nowadays, it become more value than Wal-Mart, it had come a long way from being just a book store, it is the largest online retailer. Amazon is the company that changes people’s shopping style, it provides a new approach of shopping, online shopping. It totally changed people’s old mind and it changed people’s life. Amazon offers almost everything online to help people who do not have time or unable to shopping in store. Amazon building a reputation for reasonable prices and top-notch customer service and delivery options. There is no time limitation of Amazon, customer has guarantee of the product that sold by Amazon, and most important, people are able to compare the price on the website easily so that they can get the cheapest product. All the features of Amazon are challenging Wal-Mart’s business strategy. Data shows that Amazon is eating Wal-Mart’s lunch: after creating $109.7 billion in shareholder wealth this year,...
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