Walmart…a tech company?

Background

Founding Story:

In 1950, Sam Walton (known as Mr. Sam) opened a five-and-dime store after gaining retail experience from working in other businesses. This retail store of inexpensive goods was very successful, which inspired Sam to open a store of similar style, with more options but maintaining those cheap prices, called Walmart in 1962 (Walton – ton + mart = Walmart). This store was opened in Rogers, Arkansas, because Sam and his wife wanted to live in a small town and Sam liked that there were many options for places to hunt.

Lowering prices, that will never work.

In 1970, 8 years after opening, Walmart went public. It wasn’t just the prices that made Walmart successful so quickly (although it definitely helped), but the strong commitment to the service to both his costumers and his associates. Today, Walmart has over 11,700 stores and clubs under 58 banners in 28 countries. Seems to me like Sam’s plan for Walmart worked!

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“Everyday Low Prices”

For the last 55 years, Walmart has been providing “everyday low prices”. How? How do they offer the lowest prices and be Fortune’s #1 company? There is a few ways they do this.

Walmart captures a huge market share by selling almost everything. No more running from store to store to get groceries, clothing, and a school supplies–everything is in one place: Walmart. Walmart’s different formats such as Sam’s Club, Walmart Discount Stores, Walmart Supercenters, and neighborhood markets help their market reach. The fact that 90% of Americans live within 15 miles of a Walmart doesn’t hurt either.

Walmart has always been tech-savy, we (or at least I) just didn’t know it. Earlier on than other companies, Walmart created a very effective inventory management system. All of their products had barcodes or RFID tags so that Walmart always knew “what they needed, how much they needed, and when they needed it.” They also were able to start communicating with manufacturers directly, allowing them to get better prices.

Walmart doesn’t make their money on their margins. They make their money on the volume they sell and provide. The larger the volume they sell, the more bargaining power they have, and the more flexibility they have with their supply costs. This was a new strategy at the time, making Walmart so successful and unique.

Some of the less popular ways that Walmart saves money, is through low wages and bad employee benefits. However, Walmart recently announced that they will be increasing starting employee wages and improving certain employee benefits as a result of the new tax bill. This is extremely exciting to Walmart’s 2.3 million employees.

Other interesting ways Walmart has cut costs have been through changes in plastic bags and printing shorter receipts. The change in plastic bags cut $20 million in costs while printing shorter receipts cut $7 million in costs. Crazy.

Walmart Labs

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Walmart Labs has been very active since its founding in 2011. Walmart Labs works to “help people around the world save money and live better – anytime and anywhere – in retail stores, online, and through their mobile devices.” While some features are larger and more public than others, Walmart Labs is continually working to improve the consumer experience and bridge the connection between Walmart’s brick and mortar stores and online/mobile stores. Some of the features they have rolled out include the following:

Savings Catcher (2014):

Screenshot 2018-01-27 12.32.32

Savings Catcher allows consumers to enter their Walmart receipt into the app which automatically compares the prices they paid with Walmart’s competitor’s prices. A competitor sells the same products that you just bought for less? Walmart will issue a gift card with the price difference. This drew many people into the app, and also emphasized Walmart’s commitment to low prices.

Walmart Pay (2015):

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Walmart Pay allows users to pay for their items through their Walmart mobile app. While Walmart Pay is not as popular as Apple Pay (although I do not think they are comparable considering Apple Pay is not restricted to a single company as Walmart’s is), Walmart Pay is successful in its own way. In addition, the Walmart mobile app allows you to search for coupons and automatically apply them to any qualifying purchase, and also saves a digital copy of all your receipts making for easy organization.

Scan & Go (2014 and again in 2018):

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No more waiting in grocery lines. With Scan & Go, you can scan your products as you go, have a store associate validate your digital code/receipt, and you’re all set! Walmart tested this technology in 2014, but struggled with consumers actually using the service. However, they have revamped the feature and have recently launched it in 125 stores nationwide.

Other innovations from Walmart Labs include store maps, omnichannel, mobile check-in, mobile: leveraging stores, baby registry, responsive design, and more. You can read more about each feature here.

Store No. 8

Walmart has pursued innovation in various forms, including through their Store No. 8. Named after an early store remembered by Sam Walton as an experiment, Store No. 8 is Walmart’s startup incubator that was founded in February 2017. Shortly after its founding, Store No. 8 brought on Rent the Runway’s Jenny Fleiss as co-founder and CEO of their first portfolio company to help reshape the retail experience.

“Store No 8 is where wild ideas, impossible notions, and big bets become scaleable realities.”

A current project that Store No. 8 is working on is creating an entirely cashierless store, similar to Amazon’s Go. This will definitely be a step up from Walmart’s current Scan & Go service and it will be exciting to see their execution.

 

Competition?

Walmart will never be an Amazon, nor is it trying to be. Rather, Walmart is simply looking to be a competitor and improve their e-commerce abilities. As you can see from the numbers below, Walmart is one of a kind.

Fortune 500 Walmart #1

Amazon isn’t even in the top 10!

Walmart has the capital and resources to be as big as they want. However, it’s the execution and how they use their resources that will determine their success and whether they will be able to keep up with ever improving technology. Although they got off to a late start, they have stepped up to the plate and are making a clear effort to improve their technologies.

Wrap-Up

While Walmart has not always presented itself as a tech company, it absolutely is. Between Walmart Labs, Store No. 8, and more, Walmart is continually creating new ways to increase innovation and further their progress to become more advanced. Today, Walmart is a company we will be, and should be, visiting during Tech Trek…and I can’t wait!

 

 

*This post was pre-approved by Professor Kane to be posted a little bit after my presentation.

 

11 thoughts on “Walmart…a tech company?

  1. Awesome post! I was just as surprised as you that we were visiting Walmart Labs on our trip. It’s interesting to see how the public investors are betting big on Amazon, despite it not even cracking the top 10 in your revenues infographic. Though, like you said, Walmart isn’t trying to be Amazon, it may have to mimic certain things like its operational efficiency, massive logistics network, and acquisitions to convince investors that they’re on the same playing field (Amazon is valued at ~$675B and Walmart is valued at ~$321B).

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  2. Great post Katie, and great presentation in class. It will be very interesting to continue to watch Walmart closely as the Amazon vs. Walmart rivalry plays out. Whether they like it or not, I think Amazon is still Walmart’s #1 competitor.

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  3. Nice post and great presentation. I believe that Walmart Labs has to be the future for Walmart as everything becomes more and more digitized. Although they are latecomers to the “2 day shipping”, I believe that they could potentially have a leg up on Amazon for same day delivery because of their extensive and spread out empire of stores. You already touched on the fact that they have acquired some of their own shipping companies, so it seems that they are already heading into that direction. What do you think?

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  4. You have certainly convinced me that Walmart is worth a visit! As someone who wanders around big stores such as Walmart just searching for one item, I will have to try the Store Maps feature on the app. Furthermore, Walmart’s ability to make small operational changes that translate into huge cost savings is quite amazing. Conceptually, it’s hard to imagine saving 7 million dollars just in receipt printing costs. Someone tell CVS!

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  5. Great post and presentation last week! I, personally, am not accustomed to thinking of Walmart as a major competitor to Amazon, so this taught me a lot about their rising online presence. Also, I thought Walmart’s effort to establish a no-line check out system (in 2014!) through Scan & Go is particularly interesting, especially in the wake of the recent Amazon Go platform. Excited to visit Walmart Labs in March!

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  6. Awesome work, Katie. I was fascinated when reading “The Everything Store” that Sam Walton inspired Jeff Bezos. Bezos used a lot of the ideas that he learned in reading Walton’s autobiography (like customer obsession, constant improvement, and commitment to low prices) and applied it to forming Amazon’s corporate culture. It’s no shocker that Amazon & Walmart are related in many ways.

    Loved your information on Savings Catcher. I never knew that Walmart created an app to demonstrate its commitment to matching the lowest price possible! Really interesting stuff.

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  7. Great job, Katie! I also didn’t consider Walmart a tech company but following your presentation and this post—they are a definitely on the same playing field as Amazon. I found it interesting to learn about their use of RFID before many other retailers, and also about Walmart Labs and Store No. 8. I’m excited to visit them in March and also follow where they continue to make investments in technology to improve the customer experience. I don’t think any major tech companies or retailers should count them out.
    Kelsey

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  8. Great post, Katie! It dives into many of the things you mentioned in your presentation, and provides a lot of insight that I had never known about Walmart’s depth. Considering the early use of RFID and Scan & Go, perhaps Walmart isn’t as behind as we may think just because of their online retail and shipping in comparison to Amazon. As Walmart enhances their online platform, I wonder if consumers will begin to choose it over Amazon because of reliability and brand names. Looking forward to this company visit!

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  9. I loved your presentation last week! I learned so much about Walmart’s tech-savviness that I didn’t know before. Informative post, as well. I enjoyed reading about the Savings Catcher, which I had no idea existed until now. I knew that Walmart was a great place to find a steal, but the extent to which the company goes to exemplify its commitment to low prices is pretty incredible.

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  10. Pingback: Shopping Showdown: The Battle for E-Commerce | Tech Trek

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