Strategic Recommendations for Walmart.com to be ahead of Amazon.com
Walmart is a U.S. multinational retail company operating a chain of hypermarket, grocery stores, and discounted stores. The company operates under different brands using Walmart for the United States and Canadian brand, Best Price in India, ASDA in the UK, and Seiyu in Japan. By June 2016, Walmart is the largest retail store by revenue with revenue of $482.1 billion and net income of $15.08 billion. Despite the success of Walmart over the years, the company has still recorded poor performances in e-commerce compared to Amazon.com. While Walmart has launched the online business more than 15 years ago, the company is still struggling in the online business. The revenue realized from the online sales is still insignificant compared with the revenue realized from the in- stores.
Objective of this paper is to provide the recommendations for Walmart Executive to improve their performances in the online sales.
Recommendations to boost Sales in the Online Stores
In the United States, Walmart realizes only 7% of their revenue from online sales. (Mcintyre, 2016). Although Walmart is a price leader for the in-store retail items, however, the Walmart.com has still not offered low prices for the items sold in the online stores. Comparatively, Amazon.com s offers lower prices for their items in the online stores compared to the prices offered by Walmart.com. In the competitive business environment, price and product’s quality are the major factors that pull customers towards products. Thus, Walmart.com should emulate the Amazon.com and offer lower prices for their items. At the end 2015 fiscal year, Walmart revenue was $485.65 Billion, however, declined to $482.13 Billion at the end of 2016 fiscal. Similarly, the net profits declined from $16.81 Billion in 2015 to $15.08 billion at the end of 2016 fiscal year. Thus, the Walmart needs to make a strategic move to take advantages of e-commerce to boost its sales.
Compared to Amazon that offers free shipping for virtually all products shipped to the U.S. customers, Walmart.com has just started an offering a free shipping for their online customers because the company still relies on the brick and mortar business for their revenue. Thus, many online customers have not yet aware that the Walmart.com offers a free shipping. Thus, the company needs to offer a comprehensive advert to educate their customers about the free shipping to attract more customers towards their online store.
While Walmart.com is imitating other e-commerce companies such as Amazon.com, however, the company is still far behind in offering a streaming video to online customer, thus, the company needs to make a radical approach to offer streamline video in the Walmart.com. Moreover, Walmart.com needs to offer some Prime programs such as free online storage for shoppers and vendors. Additionally, Walmart should offer a content partnership with Apple TV and Netflix to drive up the video services for its customer. Walmart.com should also offer a partnership program with different electronic companies such as HP, Dell, Samsung and Apple. These partnerships will assist Walmart.com to improve their revenues. Compared to Amazon.com that offers a variety of electronic product, Walmart.com has not yet offered a wide variety of electronic product, thus Walmart.com needs to offer different electronic product for their online customers. (Michael, Hitt, Duane, et al. 2016).
Moreover, Walmart is still being dominated by conventional store managers who still believe that e-commerce will cannibalize the in-store sales as well as their bonuses, thus, store managers are against putting the items in the online shopping bags. Thus, Walmart.com needs to employ ambitious online store managers with the goal of boosting the online sales. The recommendations will assist Walmart to boost the online revenue by 150% within the next three years. In the 2015 fiscal year, Walmart.com revenues were $12.2 Billion and would increase to $30.5 Billion (150% increase) in the next three years with the implementation of the recommendations.
The study provides recommendations for Walmart.com to boost its revenue in the next three years. A lower product price is the top priority to boost sales for Walmart.com. The benefit of the option is that it will attract more customers to the online stores, however, the strategy can lead to a price war from other online retail stores, however, Walmart has superior financial resources to withstand the competitions.
McIntyre, D.A. (2016). Walmart Online Sales Remain Tiny Fraction of Revenue. Wall Street Journal.
Michael, A. Hitt, R. Duane, I. et al. (2016). Strategic Management: Concepts: Competitiveness and Globalization. Cengage Learning.