Shoppers demand more from the retail customer experience than product availability and service in 2021. Nor is the ability to provide frictionless browsing purchasing and research options exclusive to digital retail. Brick and mortar may still retain the lion’s share of the US retail market by over 85 percent. But shopping habits have changed drastically over the past ten years. Today’s consumers are more informed. They’re more connected. They’re more demanding. And 73 percent of them are just as likely to shop online as they are in-store, even in spite of pandemic relaxations.
So why does Walmart succeed where other retailers fail?
It’s not just their price advantage. And it’s not just the strength of the Walmart name. They may lag far behind Amazon’s market share of digital retail, Walmart has successfully bridged the gap between brick and mortar and eCommerce in ways that even Amazon couldn’t have predicted.
Supply Chains and Walmart’s Automation Push
Walmart’s projected $75 Billion online revenue may seem small in comparison to Amazon. But their continued digital investments are nothing to scoff at. And at the heart of Walmart’s $14 Billion digital push is a transformation which could revolutionize the supply chain industry.
An estimated 1.5 million deliveries are made each week from Walmart via third party delivery providers. It may seem like a staggering figure, but that sheer volume doesn’t account for human error in fulfillment. Nor does it take demand forecasting into consideration—one of the more significant challenges retailers faced during the great digital transition of 2020.
Automation may seem like it removes the human element out of fulfillment. But Walmart is hoping the opposite is true. Namely, by automating standard fulfillment processes, employees are freed from time consuming and error-prone labor while customers and stores can expect more accurate inventory management and delivery times. The result is a precision-driven process; one which maximizes a high volume flow of traffic and shipments.
It’s a process that’s becoming increasingly standard in both physical and digital retail. The robotic process automation market is predicted to see an increase of almost 20 percent by the end of 2021, while AI-driven demand forecasting can help reduce supply chain errors by as much as 50 percent. And automation is becoming increasingly attractive to consumers, as well. A recent survey from Windstream Enterprises found that 68 percent of consumers are more likely to shop at a retailer who offers automated returns—a process Walmart launched in-store as far back as 2017.
Walmart’s Digital Transformation
Walmart may be the undisputed king of brick and mortar retail. But with 90 percent of their estimated 220 million weekly customers living within 10 miles of a store, is there any need for Walmart to establish digital innovation as a priority?
It turns out there is. A 2020 report from PwC revealed that 86 percent of consumers are likely to continue their increased online shopping habits even as pandemic restrictions are slowly being lifted. Yet there’s a certain loss in translation when a brick and mortar brand transitions to a digital format. Walmart’s chief consumer advantage may be largely due to their discount pricing structure, but physicality still remains a significant factor in the overall customer experience. Yet Walmart has been able to position itself as a major contender in eCommerce through a digital transformation which has affected both product life cycles as well as its organizational structure.
When Walmart first launched its eCommerce presence in 2000, there were virtually no physical retailers providing online sales. The digital commerce market was still in its infancy, dominated by and large by Amazon. And at least in the US, it remains so today. But Amazon has historically been unable to make any significant headway in brick and mortar. Walmart had almost forty years of experience as a retailer when they made the jump to eCommerce. And they brought considerable insight into consumer needs with them—resulting in commonplace delivery methods such as BOPIS and automated in-store inventory scanning, as well as partnering with JD.com to expand both their online and physical presence in China.
“We're also an innovation company,” said Walmart CEO Doug McMillan in a 2018 interview. “Current and emerging technologies make it possible to serve customers better than ever before. We're learning how to work differently. We're learning how to put product management, engineering and business leadership together to work in a more agile fashion.”
Can Walmart Embrace Digital Challenges Beyond 2021?
Globally, eCommerce is experiencing a growth rate unlike any before. Yet with new growth comes new challenges—challenges impacting both digital and brick and mortar retail alike.
Retailers who fail to implement an effective digital strategy are rapidly finding themselves obsolete as more and more consumers are demanding a seamless flow between the online and in-store customer experience. Historically, big box retailers spend the majority of their capital on physical expansion and rebranding. However, Walmart doesn’t need to. They continue to retain the most loyal customers in the US; customers who have embraced Walmart’s digital transformation with open arms. But can Walmart embrace the challenges posed by that loyalty?
That’s the $35 Billion question.
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