Wal-Mart is one of the biggest retailers across the world with about 10,000 outlets across the world and an annual avenue of nearly $500 billion. The firm sells nearly all products groups including electronics, apparel, home furnishing items, groceries, appliances, sporting items and drugs, while still maintaining its everyday low price (EDLP) strategy. Nevertheless, half of its profits come from groceries. Wal-Mart functions in three business section:
Wal-Mart international, Wal-Mart U.S. and Sam’s Club. The biggest business segment is Wal-Mart U.S. accounting for about 60 percent of its profits. Sam’s Club is the warehouse model of the retailer where it imposes an annual membership fee to its clients, permitting them to purchase goods at huge discounts. The segment of the U.S. is the most important to the firm. Wal-Mart has established a dependable brand with understandable value proposition and has grown across the United States, thus becoming the country’s biggest retailer (Mamula, 2012 p.55).
Although Wal-Mart has few outlets in the United States in comparison to global markets, U.S. outlet is approximately 2.5 times bigger than the international outlet regarding the retail square footage. In 2016, Wal-Mart US square footage for each outlet was 150,000 and 59,200 for Wal-Mart international. Besides, the Wal-Mart US outlet profit was at $445 while that of Wal-Mart international outlet amounted to $310. Therefore, regardless of similarity in outlet, the US section is more important to the firm in comparison to the international section.
Key Trends
Self –Cannibalization Threat Due to Large Size: income growth and long-term sales of Wal-Mart relies greatly on the ability of the company to open new outlets and stretch into new markets. Nevertheless, due to the size of Wal-Mart, it is exposed to the risk of dismantling it sales amount in the United States, therefore efficiently competing with itself for shares in the market. It is the reason why the company has restrained its expansion.
Enhancing productivity of outlet and smaller outlet in urban markets: introducing other large and Supercenters format outlets may be challenging for Wal-Mart due to its huge presence. The organization is thus concentrating efforts on maximizing its outlet productivity. To achieve that, the company has been restructuring its outlets and transforming its discount outlets into supercenters (Roy, Datta and Basu, 2016 p.23). While discount outlets of Wal-Mart provide an extensive category of general goods and few different food products, its supercenters provide general products and a supermarket. Between 2013 -2016, Wal-Mart discontinued 16 discount outlets and started 299 new supercenters.
Executives of Wal-Mart have reported that the future outlets of the company will cost 16 percent less, use 8 percent less space, and operate more effectively. The smaller outlets of the firm referred to as Neighborhood market outlets, are about a tenth the Wal-Mart Supercenter size and provide 15,000 products as compared to 100,000 provided at a supercenter. Despite the small size of Neighborhood markets, it provides everyday general items and groceries and concentrates on attracting clients who makes purchases frequently. Such a format can succeed in large towns, which have constraints of space and where busy timetable hinders clients from visiting supercenter.
Growth of Online Platforms
Online retail is becoming popular due to increasing usage of internet and the generation of tablets and smartphones (Deng and Zhang, 2014 p.144). Forrester predicts that online sales will increase at an annual rate of growth of 8 percent between 2016-2020. Wal-Mart anticipates being in the lead of the market growth with its enhanced e-commerce investments and delivery efficiency. The organization is looking to connect its e-commerce platforms and outlets to offer consistent shopping experience. It has a plan of using its extensive physical presence across the nation as a fulfillment network of e-commerce. Its service of pay-with-cash, which permits the clients to make orders online and pay at outlets, is doing very well.
Wal-Mart has used a lot of money in the previous years to compete with other competitors such as Amazon and other fast growing discounters. Wal-Mart bought Jet.com for about $3.3 billion to expand its segment of e-commerce in 2016. Apart from acquiring the Jet, Wal-Mart plans to use over $1 billion to improve its customer service and store technology (Cao, 2014 p.81). Besides, the capital expenditures of the company are predicted to be about $11 billion in budgetary 2018 as the firm control the openings of new store and plans to concentrate in digital initiatives and e-commerce. From a perspective of marketplace, the firm covers over 70 million SKUS, in comparison to the 2 million it provided in 2013. Retailers selling online contribute to the highest growth of the company.
Wal-Mart has also started a program of free two-day shipping which would need no membership problem. The retailer purchased Moosejaw, Bonobos, Jet.com, and Shoebuy to support its online endeavor, and is looking for possibilities for delivery through customers (crowdsourcing) to minimize the costs linked to deliveries (Fischer et al., 2011 p.571). Wal-Mart is convinced that with these strategies, its revenues of e-commerce will grow by approximately 30 percent annually.
E-Commerce Business Model
Wal-Mart is a retail business, as such; its purchasing business design should be an electronic retailer business plan. It is unnecessary to select another business model that Wal-Mart has insufficient experience in. it would only cause unrequired risks. The e-tailing (Electronic retailer) business model permits Wal-Mart to sell its services and goods via the internet and concurrently permit for easy B2B (Business-to-Business) transactions to take place (Boateng, 2014 p.249). To understand why a particular E-commerce model is attractive, the eight business model elements should be analyzed relating to it. The eight business model elements include; value proposition, market opportunity, competitive advantage, organizational development, revenue model, competitive environment, market strategy, and management team.
The Wal-Mart’s value proposition is saving consumers money and time because it offers an extensive range of goods for low prices in comparison with others. Thus, it is unnecessary for an end-user to search for various websites where they can purchase the goods they want. The second value proposition of Walmart is fast and cheap shipping (Mathew, 2016 p.58). Wal-Mart has several stores functioning across North America, as such, customers will always find a store near them. Therefore, when a client orders a product, that product is transported to his or her address cheaply and quickly. The other value propositions of Wal-Mart are easy return policies and quality goods. Because Walmart is a big organization, in consideration of its reputation and satisfaction of customers, it makes sure that it only offers quality goods and if a client feels unsatisfied then they permit him or her to exchange or return it without much trouble.
The revenue model for e-commerce of Wal-Mart, electronic retailing business model would be the revenue model of sales (Singh, 2016 p.72). The method of Wal-Mart of creating money mainly depends on selling its goods to clients. Thus, Wal-Mart creates profit by purchasing goods in large volumes for reduced cost, then selling them physically or online to its end-users. Besides, Wal-Mart can consider introducing a subscription business model that looks like that of Costco where loyal customers can acquire discounts after buying and other benefits.
The Wal-Mart’s market opportunity to serve as an e-retailer seems to be immense. The number of individuals buying goods online is increasing and thus, to maintain a powerful competitive presence against other Electronic retailer and retailers, Wal-Mart must offer high level Electronic retailing services to its clients (Cobos, Wang and Okumus, 2009 p.435). Wal-Mart is popular for its global-class supply chain management system, as such, the company should take advantage of that while rivaling with other Electronic retailers.
The Wal-Mart’s competitive advantage regarding the e-commerce is powerful. Their greatest competitors are mainly the two virtual retailers EBay and Amazon. These organizations have an extensive experience in e-commerce since that is their only operation. Thus, to compete efficiently, Wal-Mart must offer an easy to use and comfortable interface of the website, shipping and products, fast and cheap services, safe methods of payment and update content in various languages (Mathew, 2016 p.1205). Besides, highly skilled personnel should be contacted before any adjustments are made.
The market strategy should incorporate efficient marketing campaigns that reveals the strengths of Wal-Mart to the consumers while covering their weaknesses (Baldus, 2015 p.480). The marketing campaign should reveal the company’s cheap prices, exceptional customer service, quality products, cheap and fast shipping and trouble free exchange and return policy.
The competitive advantage of the company is built in its existing business. Supply chain management system is the huge and popular competitive advantage that Wal-Mart has. The system has confirmed to be greatly effective at offering an appropriate flow of information between all departments, suppliers and outlets. For Wal-Mart to maintain a competitive edge in the world of e-commerce, it must utilize its existing successful techniques to do its Electronic retailing business (Jaiswal, Niraj and Venugopal, 2010 p.237). Highly skilled and professional staff must be consulted and employed to maintain a competitive advantage over others and offer first-class level services.
The organizational development of the firm should maintain a steady and slow speed and stay updated with transformations in the industry. It will maintain a consistent growth and assure a smooth development throughout the development of Wal-Mart.
The team of management should comprise of high skilled individuals that has portrayed a high competency level throughout their course in their specific expertise. Having a highly specialized and skilled team of management would make sure that all changed and developments of e-commerce are acknowledged and any update is implemented in appropriate time.
E-Commerce Technology
Wal-Mart is among the biggest retailers globally with about 10,000 outlets across the world and an annual avenue of nearly $500 billion. However, as technology continues to grow, e-commerce technology is beginning to include another measure to what describes their success. To be aware of the ways in which the company can acquire a higher amount of success than they have currently, there are several things that Wal-Mart should focus on.
First, Wal-Mart should consider the Visioning process. Wal-Mart needs to have a specific visioning on what to achieve and how to achieve it. Since the main objective of Wal-Mart is to sell a collection of services and goods to its clients, they should therefore be able to determine the marketplace characterization, target audience and a development timeline. Regarding the target audience, the organization should be doubtful on how to sell particular types of goods to what clients depending on their personal desire. Another thing which is essential in the process of visioning is the characterization of the marketplace. Wal-Mart should gain a better understanding of their rivals and the market (Borodai, 2017 p.27).
Since Wal-Mart is not the only company with several services and product, they should gain a clear understanding of their rivals in the industry and what they provide to their clients. It returns back to the value proposition concept which basically assess the whole organization, and the means in which clients establish a powerful connection with a firm. It will offer more knowledge of how a specific company within an industry possess many advantages over other companies in the same industry. An understanding is obtained of the techniques or ways that a company use that others are not utilizing.
Wal-Mart should consider such things. The development timeline is as essential as marketplace characterization and target audience. It offers them a chance to see how their industry is developing. It will permit Wal-Mart to visualize how the organization develops on a bit by bit basis. The advantage of having a development timeline is that it will permit Wal-Mart in generating more strategic methods that will assist them in accomplishing competitive edge and financial goals they want to accomplish.
In addition to the target audience, Wal-Mart should have an appropriate understanding of potential clients. Potential clients can be defined in several ways (Eid and El-Kassrawy, 2012 p.43). They include, behavior patterns, purchaser patterns, demographics and current patterns of consumption. Since Wal-Mart is famous for selling electronics, clothes and food, utilizing behavior patterns and demographics can permit Wal-Mart in creating more skeptical decisions on what goods to sell to who. These methods will permit the company in collecting personal information that will permit them in gaining more knowledge about their customers.
Online Marketing Activities
Wal-Mart Canada appears to have a simple but different online advertising model. For instance, they are ethically friendly as they have Twitter, Instagram, Facebook, Pinterest, a blog, among others. For example, on Twitter, Wal-Mart has several Twitter handles to divide audience by significance (Petersen, 2014). For instance, @WalmartHealthy, @WalmartGreen, @WalmartHub, @Walmart, @WalmartCanada, among others. Among all of their channels of social media information varies. For example, they omitted the charity program of Sing2Salute post on their Facebook page, but post it on their Twitter. Rather, Wal-Mart should use a program such as Hootsuite or Buffer which is efficient and cheap and permits all people in social media to be linked together, thus offering the power to post same information on all platforms on a click.
Wal-Mart have to know that some people are more engaged in one channel of social media than the other, or some may prefer one over another. Therefore, if the company fails to post same things on each of their channels of social media then some of their audience will not receive some of the posts. Besides, both Hootsuite and Buffer which connect one’s channel of social media permit for you to monitor and track detailed analytics about the audience. These analytics permit for better targeting and involvement from clients. Moreover, Instagram issued their API to the people, permitting both Hootsuite, Buffer and other organizations to permit integration and scheduling with other platforms of social media (Borin and Metcalf, 2010 p.149). As such, through the application of an integration tool of social media it will reinforce their current social networking plan.
Moreover, the company introduced their Instagram page of Wal-Mart Canada some months ago. To advance the page, Wal-Mart need to carry out the six simple tips: post funny information, post some inspirational content, curate both irrelevant and relevant but interesting posts, ask questions to their audience to gain involvement, portray a personal side (for instance, a story of an employee displayed every week) and order posts at peak timing (Thompson, 2015). These tips will result to higher engagement and faster growth in Instagram and other networks of social media. Besides, the utilization of links and photos on social media increase the rate of engagement. Such arguments were raised by Julian Gottke who finished a social media analysis. Her findings suggested that links and photos received 45.23 percent and 43.64 percent respectively in engagement in comparison to videos or just plain text (Gottke, 2015).
Besides, since the top competitors of Wal-Mart are EBay, Amazon, Best Buy and other big retailers, a diversified and solid online advertising plan is required. Today, people are paying more attention to social media (Pappas, 2015 p.214). To compete successfully, Wal-Mart should introduce creative and new content with links and images that will interest clients, resulting to engagement. Undoubtedly, Wal-Mart is conducting things wrongly by looking on their recognition and numbers received on their channels of social media. Nevertheless, illustrated recommendations will permit for a more solid and stronger online advertising plan to be implemented.
E-Commerce Online Marketing Metrics
Wal-Mart serves an extensive target audience since they provide an extensive variety of goods in many departments. For such reason, it is challenging to reduce goods to the ones needed to concentrate their marketing efforts thus maximizing their profits. Before March 2015, Wal-Mart was utilizing the Google Inventory Ads to assist in driving their online jam to locations of physical outlets by advertising their store, so that clients could know where to get exactly what they were searching for. Nevertheless, Wal-Mart withdrew from using local Inventory Ads services of Google because executives of Wal-Mart wanted to have their local-inventory service (Sterling, 2015). Nevertheless, it is advisable that Wal-Mart continue using the search engine of Google to instantly show store information when a person searches for a particular product.
Besides, utilizing Google’s services will permit Wal-Mart to trace their content better, and establishing their own system present more risks since the company does not have sufficient experience to software and analytics, while Google is a chief in the sector and has the ability to provide all types of features to document online metrics. Although Walmart purchased Inkiru, a predictive intelligence and data analytics organization, some risks may emerge since it is a new firm that has to compete with analytics giants such as Amazon Web Services ad Google (Rao, 2013). Using Google consistently will provide Wal-Mart the guarantee of excellent service with their analytics.
Regarding the kind of metrics that Wal-Mart should concentrate on pursuing, it is advisable to concentrate on the metrics that are documented om the website of Wal-Mart contrary to the metrics documented through email and social media to make decisions. Although email and social media are of importance to gain publicity and connect the public with the organization, they would offer an inappropriate view of clients displaying interest in particular items, because regularly on social media, pages of business share other contents that are indirectly linked to the business to keep audience involved with their page. For instance, some people like a post in Facebook that Wal-Mart shares about a particular car, but the individuals might be attracted to the car and not the business of Wal-Mart itself.
In addition, Wal-Mart distributes newsletter emails to individuals who agree to receive them, but the open rate and delivery rate may provide inappropriate results because the emails may go to a junk mail folder of a person in their email. Website of Wal-Mart would be a rather appropriate comparison to outlet traffic because clients would visit their websites to search for items for sale, just as they would visit the physical outlets (Faisal, 2016 p.75). For the previous reasons, it is recommended for Wal-Mart to concentrate on the metrics that are appropriate to their website, such as rate of cart conversion, rate of abandonment, page views, retention rate, among others.
One way Wal-Mart can acquire information of the market is to carry out market research analysis online and provide inspiration for bringing to fruition those analyses such as in-store credit. Carrying out market research analyses will provide more personalized outcomes about the customers who visits their websites and inspect particular goods and other helpful information (Rosaci and Sarnè, 2014 p.17). Moreover, market research analysis can group the information by income level, age group and occupation. It will permit Wal-Mart to focus on particular group with their marketing and provide a more illustrative way to promote their goods.
Conclusion
Wal-Mart sells nearly all products groups including electronics, apparel, home furnishing items, groceries, appliances, sporting items and drugs, while still maintaining its everyday low price (EDLP) strategy. Wal-Mart is a retail business, as such, its purchasing business design should be an electronic retailer business plan. It is unnecessary to select another business model that Wal-Mart has insufficient experience in. It would only cause unrequired risks. Its online retail is becoming popular due to increasing usage of internet and the generation of tablets and smartphones.
Wal-Mart anticipates to be in the lead of the market growth with its enhanced e-commerce investments and delivery efficiency. However, as technology continues to grow, e-commerce technology is beginning to include another measure to what describes their success. To be aware of the ways in which the company can acquire a higher amount of success than they have currently, Wal-Mart should consider the Visioning process. Wal-Mart need to have a specific visioning on what to achieve and how to achieve it. Since the main objective of Wal-Mart is to sell a collection of services and goods to its clients, they should therefore be able to determine the marketplace characterization, target audience and a development timeline.
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