The Definitive Walmart Technology Review

Did you know that the legal name “Wal-Mart Stores, Inc.” was changed effective Feb. 1, 2018 to “Walmart Inc.”? The name change is intended to reflect the fact that today’s customers don’t just shop in stores.

I’ve kept an eye on Walmart because historically the company was the leading innovator in regard to advancing retail focused technology and supply chain strategy. Even though Walmart isn’t the typical “underdog”, in the fight for online retail supremacy it currently finds itself in this position; and everyone can appreciate an underdog (see Philadelphia Eagles). Currently Walmart is locked in a fierce battle with Amazon to carve out a more substantial space in digital and online retail. As such, the company is bolstering its capabilities by focusing on technology enabled business processes, training and digital growth to keep pace with Amazon’s world domination efforts.

Walmart is experimenting with cutting edge technology such as virtual reality, autonomous robots, cloud storage platforms, cashier-less stores and even blockchain. It’s also formed various online retail and technology-based alliances to keep pace with Team Bezos. Walmart’s kitchen sink technology strategy seems to be paying dividends from an online sales perspective. E-Commerce industry luminary Marc Lore and his influence can been seen in some of the innovative technology plays.


Walmart, yes Walmart is getting in on the blockchain ledger revolution (or hype). The company plans to team up with IBM, and Chinese based Tsinghua University to create a blockchain food safety alliance.

Here is how the partnership will work according to ZDNet:

  • Walmart, JD, IBM and Tsinghua University will work with regulators and the food supply chain to develop standards and partnerships for safety.
  • IBM provides its blockchain platform
  • Tsinghua University is the technical advisor and will provide expertise in technology and China’s food safety ecosystem.
  • Walmart and JD will help develop and optimize technology that can be rolled out to suppliers and retailers.

Walmart has shown that blockchain technology has reduced the time it takes to trace food from farm to store from days to seconds. During product recalls this capability could prove useful for the retailer.

If Walmart were to offer a more investor appealing use of blockchain (e.g. a “Sam’s-Coin” ICO), you could count me in for a high two figure investment.

Ok Google

Goole Home Walmart

Image courtesy of ZDNet

Straight from “the enemy of my enemy is my friend” playbook, Walmart and Google announced a partnership to make Walmart’s items available on Google’s shopping service, Google Express.

The New York Times reports that “it’s the first time the world’s biggest retailer has made its products available online in the United States outside of its own website”. We can readily see what Walmart gets out of the alliance (expanded presence on the dominant search engine) but interpreting Google’s angle requires a bit more perspicacity.

Google fears that its search engine is being bypassed by consumers who go straight to Walmart to search for products. Google, (you may have heard) dabbles a bit in search and online advertising. A substantial shift in product search behavior that favors Amazon is bad for business. If Google can expand its own online marketplace with Walmart’s appreciable offerings as well as entice customers to use Google Home and the mobile based Google Assistant to locate products, then the company can retain a greater share of initial product searches. Google Express already offers products from Walmart competitors Target and Costco although Walmart’s collaboration offers the largest number of items.

“Walmart customers can link their accounts to Google, allowing the technology giant to learn their past shopping behavior to better predict what they want in the future. Google said that because more than 20 percent of searches conducted on smartphones these days are done by voice, it expects voice-based shopping to be not far behind.”

An existing Walmart application feature called “Easy Reorder” is slated for integration with voice enabled shopping via Google Assistant. Currently, when a consumer logs into the Walmart mobile app, they can easily see their most frequently purchased in-store and online items and easily reorder those items. Integration with Google Express provides an additional data channel to bolster the effectiveness of this Walmart offering.

The Matrix:

Virtual reality would not be the first technology play that one would likely associate with Walmart. However, the company’s tech incubator (Store No. 8) has purchased Spatialand, a VR development tools company. Spatialand has previously worked with Oculus, Intel and “rap rock” artists Linkin Park to create virtual content.

Walmart’s intent is to use Spatialand to develop “immersive retail environments”. My expectations aren’t high that this acquisition will pay off in the near to medium term, but the company is demonstrating that it is trying to be on the vanguard of future retail technology. One can imagine this acquisition eventually enabling Star Trek “holodeck” capabilities where customers can enter virtual stores or dressing rooms and interact with products while in the comfort of their homes.

I propose that Spatialand and Walmart owned Bonobos would make ideal mash-up partners. Instead of trekking to a physical Bonobos store and trying on shirts and or slacks, consumers can create an avatar with similar dimensions and play virtual dress-up in 3D. The garments can then be shipped directly.

Additionally, Walmart is actually using Oculus headsets to train employees at its 170 training academies. The company has partnered with STRIVR, a virtual reality startup based in Menlo Park. I envision virtual customers stampeding through entrances on a Black Friday opening.

“STRIVR’s technology allows employees to experience real-world scenarios through the use of an Oculus headset, so that employees can prepare for situations like dealing with holiday rush crowds or cleaning up a mess in an aisle.”

There’s an App for That:

Walmart is trying to balance keeping its in-store traffic high while accommodating its growing mobile customer base. The company recently enhanced its Walmart application with a new “Store Assistant” feature that activates when a customer walks in the door. The app will allow customers to build shopping lists, calculate costs and locate in-store items at all of its domestic locations.

“So-called mobile commerce revenue — mostly generated via smartphones — will reach $208 billion, an annual increase of 40 percent, EMarketer forecasts.” – Bloomberg

Channeling its inner Tim Cook, Walmart launched a nationwide rollout of the Walmart Pay system as an additional application enhancement.

“To use the three-step payment system, shoppers link their chosen payment method to their account, open the camera on their smartphone and snap a photo of a QR code at the register. That notifies the app to process the customer’s payment. Shoppers can link their credit or debit cards, prepaid accounts or Wal-Mart gift cards to their payments; however, they still cannot use ApplePay.” – CNBC

Rise of the Machines:

As labor costs rise and technology increases, we can be sure of one thing. Robots are coming to take all of our jobs and Walmart isn’t doing much to disabuse us of this notion. As part of a pilot, the company is employing autonomous robots to about 50 locations to help perform “repeatable, predictable and manual” tasks. Primary tasks include scanning store shelves for missing stock, inventory calculations and locating mislabeled and unlabeled products. The robots stay docked in charging stations inside the store until they are activated and given an autonomous “mission”.

According to Reuters, Walmart’s CTO Jeremy King states that the robots are 50% more productive and can scan shelves three times faster at a higher accuracy. Walmart’s current carbon-based units (my words) can only scan the shelves about twice a week.

While Walmart insists that the robots won’t lead to job losses, I say to remember that technology always marches forward. Today’s “repeatable, predictable and manual” tasks are tomorrow’s non-repeatable, unpredictable and automated tasks.

Walmart scanner

Image courtesy of Walmart

Additionally, in 2016 the company “patented a system based on mini-robots that can control shopping carts, as well as complete a long list of duties once reserved for human employees.” Keep an eye on those robots as Walmart does not have a reputation for overstaffing.

In all seriousness, shelf inventory checks ensure that customer dollars aren’t left on the table due to un-shelved items. If Walmart can significantly lower the occurrences of un-shelved products with its army of shelf scanning Daleks, then the robots will pay for themselves.

Mr. Drone and Me

walmart drones

Never missing an opportunity to improve supply chain efficiency, reduce labor costs and keep pace with Amazon, Walmart is experimenting with drones. The company’s Emerging Science division has been tasked to consider future applications of drone technology to enhance operational efficiency.

Currently, inventory tracking at the company’s fulfillment centers requires employees to use lifts, harnesses and hand-held scanning devices to traverse 1.2 million square feet (26 football fields) of warehouse space; a process that can take up to a month to complete. If you consider that Walmart has close to 190 distribution centers domestically, the inventory process consumes a significant amount of labor hours when aggregated across the company.

The current plan is to utilize fully automated quad-copter drones mounted with cameras to scan the entire warehouse for inventory monitoring and error checking.

“The camera is linked to a control center and scans for tracking number matches. Matches are registered as green, empty spaces as blue, and mismatches as red. An employee monitors the drone’s progress from a computer screen.”

Drones would eventually replace the inventory quality assurance employees.

Millenial Digs:

Walmart Austin ATX
The lobby at Walmart ATX in downtown Austin. Jay Janner/Austin American-Statesman

In an effort to increase its appeal to the young, hip and tech savvy, Walmart has opened a new engineering tech design center in Austin. The new millennial digs are located in a renovated 8,000 square foot space. “Walmart ATX” will house minds that work with cutting edge technology such as machine learning, artificial Intelligence, blockchain, internet of things and other emerging technologies. Factors such as a deep talent pool and low cost of living drove the creation of this Austin hub.

Here’s hoping Amazon decides to stay far away from its retail rival and brings its talents to Atlanta, Georgia.


The saying goes that Amazon is trying to become more like Walmart and Walmart is trying to become more like Amazon. Walmart teaming up with Japanese e-commerce giant Rakuten to sell e-books solidifies this sentiment. It should go without saying that Amazon has a sizable lead in selling e-books. However, Walmart is leaving no stone unturned as far as offering products that keep e-commerce shoppers from Amazon’s web presence.

Online Grocery Pickup:

Walmart is experimenting with allowing customers to place their orders online for pickup at a local store. The scheme currently requires the company’s human employees (eventually robots) to walk the aisles using a handheld device in order to fulfill customer orders. The device acts as an in-store GPS that maps the most efficient route to assemble the customer order.

Customers then pull into a designated pickup area where live human beings (eventually robots) will dispense the pre-assembled order.

I’m not kidding about “eventually robots” dispensing the pre-assembled order. Walmart currently has an automated kiosk in Oklahoma City that dispenses customer orders from internal bins. Customers walk up to the interface and input a code which then enables the kiosk to retrieve the order. Hal, open the pod bay doors; the future is here and apparently its name is Oklahoma City.

Walmart kiosk

Courtesy of The Oklahoman

These approaches address the “last mile” problem which plagues large e-commerce players and start-ups alike. As consumer preferences shift from physical stores to online channels, repurposing stores into dual e-commerce fulfillment centers wrings additional utility from these assets.

In Home Delivery:

Another innovative e-commerce “Last Mile” proposal from Walmart involves the creation of a smart home delivery pilot. By partnering with a smart lock startup company August Home, outsourced delivery drivers will be supplied a one-time passkey entry into a customer’s home to unload cold and frozen groceries into the refrigerator. The home owner is alerted via phone notification that the driver has entered their property and can watch the in-home delivery livestreamed from security cameras. An additional notification is sent to the consumer when the door has automatically locked. This limited scale program is only being piloted in Silicon Valley (of course).

Per the Washington post:

“This is a group of people who are already used to a certain level of intrusiveness.. But God help the teenager playing hooky or the family dog who’s not expecting the delivery man.”

I can envision a future sci-fi use case involving “smart fridges” and automatic home replenishments. This pilot move is a search for an advantage in grocery delivery as Amazon recently purchased Whole Foods without overtly signaling what disruptive services may emerge from the amalgamation.

Smart Cart Technology

Jet Smart Cart

When Walmart made the largest ever purchase of a U.S. e-commerce startup with for $3.3 billion, the company was looking for a way to ramp up online sales and infuse itself with fresh perspectives for online selling.

As I’ve mentioned previously, has the potential to infuse Walmart with much needed digital innovation. This fresh perspective has the potential to add tremendous value to the organization as a whole. The “old guard” rooted in Walmart’s core business model needs to allow acquisitions to thrive instead of imposing the more conservative legacy culture.

The Jet infusion of innovative ideas back to the mothership is happening. Current Walmart e-commerce head Marc Lore launched around an innovative “smart cart” system that offers the potential of lowering the price of customer orders. Here is how it works according to Forbes:

“If you have two items in your cart which are both located in the same distribution center and can both fit into a single box, then you will pay one low price. If you add a third item that is located at a different distribution center and cannot be shipped in a single shot with the other two items, you will pay more. As you shop on the site, additional items that can be bundled most efficiently with your existing order are flagged as ‘smart items’ and an icon shows how much more you’ll save on your total order by buying them.”

The order price can be further lowered if customers use a debit card or decline returns. This smart cart process is expected to launch on Walmart’s flagship site in 2018.

Who Needs Cashiers?

Customers shopping at roughly 100 stores across 33 states can participate in Walmart’s “Scan and Go” service. Via a dedicated mobile app, customers can scan the barcodes of items as they shop, pay through the app using Walmart Pay, and then exit the store after showing a digital receipt to an employee. As customers shop and scan with their phones, they can observe the running total of their purchases. This service is currently available at all Sam’s Club locations.

In this case Walmart is keeping pace with grocery competitor Kroger which is also experimenting with digital checkout experiences. Kroger has a “Scan, Bag & Go” service rolling out at 400 grocery chains.

Additionally, Walmart’s skunkworks retail division “Store No. 8” is working on a futuristic project codenamed “Project Kepler”. This initiative goes a step further and eliminates both cashiers and checkout lines by using a combination of advanced imaging technology on par with Amazon’s “Amazon Go” concept. As customers take items off of shelves, they are automatically billed for their purchase as they walk out of the store. The acquisition is in play here as this initiative is being led by Jet’s CTO Mike Hanrahan.

Grocers already operate on razor thin margins therefore removing cashier interaction from the shopping equation fits in with the goal of lowering labor costs. Walmart employs approximately 2 million reasons to turn this future technology into reality.

Send in the Clouds:

According to the Wall Street Journal, Walmart is telling some of its technology vendors that if they want to continue being a technical supplier then they cannot run applications for the retailer on the leading cloud computing service, Amazon Web Services. Vendors who do not comply run the risk of losing key Walmart business. This is where we open our strategy textbooks to Porter’s Five Forces and key in on “Bargaining Power of Buyers” in the retail information technology provider space. The Economist reports that in 2015 Walmart poured a staggering $10.5 billion into information technology, more than any other company on the planet. To misquote E.F. Hutton, when Walmart speaks, you listen if you’re a technology vendor. The company’s cloud ultimatum is responsible for an uptick in usage of Microsoft’s Azure offering.

As I’ve mentioned in other posts, Walmart is known for its “build not buy” philosophy in regard to technology. Most of its data is housed on its own servers or Microsoft Azure which is the primary infrastructure provider for e-commerce subsidiary According to CNBC, about 80 percent of Walmart’s cloud network is now in-house.

Walmart’s cloud application development is facilitated by the company’s own open source cloud application development platform named OneOps. The aim of OneOps is to allow users to deploy applications across multiple cloud providers (i.e. allow users to easily move away from Amazon Web Services). Walmart has also been a huge contributor to OpenStack, which is an open source cloud offering and has been working with Microsoft, CenturyLink and Rackspace.

OneOps was originally developed by Walmart Labs and has since been released as an open source project so that Walmart can benefit from a broader community that’s willing to offer improvements. The main codebase is currently available on GitHub (

Foreign Investment:



Walmart is currently challenging tech titans Amazon and China’s Alibaba for a lucrative stake in India’s burgeoning online retail market. India’s expanding middle class makes its online market a lucrative target. The market is purported to reach $220 billion by 2025 according to Bank of America Merrill Lynch. Walmart is essentially barred from outright owning physical store locations in India due to the country’s restrictive foreign investment regulations. Foreign ownership for multi-brand retailers is limited to 51% and retailers must source 30% of its goods from small suppliers which poses a difficulty for Walmart. Walmart uses its global buying power to squeeze deep discounts from major suppliers such as Unilever and Proctor and Gamble. Smaller Indian firms will have more difficulty yielding to exorbitant price concessions.

Therefore, Walmart is currently in talks to purchase a sizable stake in Indian online retailer Flipkart. Flipkart is a highly attractive opportunity because it has been able to effectively compete with Amazon in India despite being outspent by Team Bezos. Flipkart currently has a 44% market share in India which is running ahead of Amazon’s share at 31%. Walmart’s multibillion dollar investment will likely value Flipkart at $20 to 23 billion.

An infusion of capital from Walmart makes sense for both parties; Flipkart can hold off attacks from Amazon while Walmart gets a piece of the action in a growing and lucrative online market. Amazon has stated its intention to invest $5 billion in India in order to beef up the number of its fulfillment centers. Ironically, Flipkart was launched in 2007 by two former Amazon employees, Sachin and Binny Bansal.

Walmart isn’t the only company looking for a piece of Flipkart as Google is also purported to make a sizable investment in the Indian firm at a valuation of $15 to $16 billion.

Walmart has had difficulties operating in India previously as evidenced by its now disbanded partnership with Bharti Enterprises. The two companies built 20 superstores branded as Best Price Modern Wholesale, but the venture fizzled due to aforementioned regulatory restrictions.

Meanwhile in China, Walmart partnered with which is a fierce Alibaba rival. Walmart and JD will merge their membership systems, so members can receive similar discounts at both retailers. In addition, the two companies will jointly work to create a system that enables to fulfill customer orders from Walmart inventories. Walmart initially had its own Chinese marketplace named Yihaodian but sold it to JD in 2016 due to its small market share in comparison to both JD and Alibaba.

Header Image Copyright: moovstock / 123RF Stock Photo


The Definitive Walmart E-Commerce and Digital Strategy Post


Walmart has long been a dominant player in the traditional “bricks & mortar” retail space. The retailing giant has about 4,600 stores in the United States and about 6,000 stores worldwide that helped it generate fiscal year 2017 revenues of $485.9 billion. However, this retailing “Death Star” has a weakness as technological changes and innovations in its industry represent both an opportunity and a threat. The biggest threat to Walmart is the consumer preference shift from traditional in-store purchases to on-line digital channels. E-commerce is a small piece of the retail pie currently (roughly 10.4% of all retail sales in 2015), but it is growing at a pace that is much faster than growth at bricks and mortar locations. If Walmart does not evolve to defend its dominant market position, the company will erode (see Montgomery Ward, Woolworths, K-Mart, Sears) allowing other industry competitors to capitalize.

Previous disruptions in the retail space have not been kind to dominant players. Sears was able to overtake dominant retailing incumbent Montgomery Ward in the 1950’s by aggressively investing into suburbs (which was a new phenomenon for the time), while Montgomery Ward skittishly hoarded cash in anticipation of another great depression [1].

Walmart is not willing to be a Montgomery Ward in this scenario as the company became aware of the risks of e-commerce underinvestment and complacency. However, e-commerce giant Amazon is more than willing to be Sears in this example by over-investing in the more recent retail business model (e-commerce). Furthermore, Amazon recently encroached into Walmart’s home turf (i.e. physical locations) by purchasing Whole Foods for $13.7 billion. This high profile acquisition signaled to Walmart and the rest of the retail industry that Amazon is willing to take unanticipated bets to develop a competitive advantage across multiple channels.

Walmart certainly has a challenging road ahead if it wishes to catch Amazon in overall e-commerce sales but it is finally competing effectively. Although the company does not break out specific e-commerce dollars, it stated that its e-commerce sales had increased 64% domestically in the first quarter of 2017. Consider that Amazon generated $136 billion in annual sales during 2016, which accounted for half of all online shopping in the United States [2].

“With approximately 160 million items for sale, Amazon has become the go-to outlet for anything. In comparison, sells “only” 15 million items — and just 2 million of them are available for the free two-day shipping. It’s no wonder 52% of online shoppers start their search on Amazon, according IHL Group.” [3]

Walmart will not be able to overtake Amazon’s position as the dominant e-commerce player in the near future, but the company is positioning itself to remain competitive.

Walmart’s Main Strategic Risks in E-Commerce

Walmart’s annual 2017 10-K filing (a comprehensive summary of financial performance) details the strategic risks that the company faces. As mentioned previously, Walmart is aware of the risks of e-commerce underinvestment and complacency. Consumer preferences are shifting to shopping online and mobile platforms.

Failure to grow our e-commerce business through the integration of physical and digital retail or otherwise, and the cost of our increasing e-commerce investments, may materially adversely affect our market position, net sales and financial performance [4].

Many companies fail to adequately capitalize on the shift in consumer preferences (e.g. Smith Corona, Blockbuster, Kodak), while other firms are able to successfully capitalize (e.g. Intel, Apple). Unsuccessful companies either refuse to risk capital, lack the vision, or lack the execution competency to produce the new products and/or technologies necessary to maintain success. With that being said, Walmart plans to increase its investments in e-commerce and technology, while moderating the number of new store openings.

Screen Shot 2017-06-11 at 5.52.14 PM.pngFigure 1. [4]

Walmart’s capital expenditures back up its strategy. Observe that a $1.023 billion reduction in new stores and clubs dove-tails with a $199 million dollar increase in already impressive expenditures related to information systems, distribution and digital retail ($4.162 billion line item).

Walmart recently divested itself of its Walmart Express brand which contributed to the reduction in new store capital expenditures. These convenience store sized locations were originally conceived in 2011 to compete in the price conscious dollar store segment. Dollar General (a digitally un-savvy competitor) purchased 41 Walmart Express stores and plans to rebrand them under the Dollar General moniker. In an age of stalled wage growth, Walmart is experiencing pricing pressure from both Dollar General and Family Dollar for the most price conscious consumers.

The bottom line is that Walmart has to walk a fine line in the implementation of its e-commerce strategy. On the one-hand, the company may not be successful in implementing and integrating its physical and digital retail channels. As of late the company has been criticized for “overpaying” for growth in regards to its acquisitions. If its e-commerce acquisitions underperform or sustain large losses, this can harm Walmart’s market position and financial performance.

On the other hand, if the company is “too successful” with their e-commerce strategy, the company runs the risk of lowering physical store traffic which could also adversely impact in-store economics. The company seems to be facing a “dammed if you don’t, damned if you do” conundrum.

“The challenge for Walmart, and for all other retailers in the e-commerce era, is to protect both sales and profits. But these goals nay be mutually exclusive. Retailers face pressure to offer both free shipping and competitive prices, which generally makes selling a product online less profitable than doing so in existing stores. To expand sales online, retailers must spend on technology, which squeezes margins further. Making matters even worse, retailers are often not gaining new customers but simply selling the same item to the same person online for less profit. ‘You pour from one bucket into a less profitable bucket,’ explains Simeon Gutman of Morgan Stanley.” [5]

Backend E-Commerce Acquisitions

Walmart’s initial e-commerce forays focused on acquiring companies that helped bolster its prowess in backend technologies. This approach was a departure from the company’s traditional “build rather than buy” philosophy which helped it obtain and retain technological competitive advantages in its supply chain processes. Its research division @WalmartLabs, augmented its e-commerce war chest by making multiple purchases in the first half of the decade. “Between 2011 and 2014, Walmart acquired 15 small companies tied in some way to e-commerce. The other thing most of them had in common was that they were selling for a bargain after failing to attract a new round of venture funding.” [6]

For example, in 2013 @WalmartLabs purchased a company named Inkiru for its predictive analytics technology to target customers in marketing campaigns. The company purchased Kosmix in 2011 to revamp its search capabilities; a project known as Polaris. Site optimization start-up Torbit was purchased in 2013 to optimize page loading of its e-commerce sites. The acquired technology compresses files to an optimum size based upon display by phones, tablets or desktops. The company also purchased Adchemy for its strong pool of data scientists and PhDs who have specialized knowledge in the areas of ad technology and search engine optimization (SEO).

As an aside, “CEO Murthy Nukala and four top executives all got payouts of between $1.5 million and $2 million in the deal” while employees who held common stock saw their holdings become worthless [7]. 

The point of these acquisitions along with others of similar characteristics, was an attempt to grow e-commerce sales organically.

The Acquisition of Marc Lore and

Walmart learned that it is both difficult and time consuming for a firm to obtain organic growth intrinsically. When asked of his biggest regret at the helm of the company, former CEO Mike Duke who held the position from 2009 to 2013 said that the company should have moved faster to expand in e-commerce. One could draw the conclusion that Walmart either believed that growth in e-commerce would shift too much volume from bread and butter physical stores or that Amazon’s rise to e-tail prominence was not a significant threat to its dominant market position.

“When I look back, I wish we had moved faster. We’ve proven ourselves to be successful in many areas, and I simply wonder why we didn’t move more quickly. This is especially true for e-commerce. Right now we’re making tremendous progress, and the business is moving, but we should have moved faster to expand this area.” – Former Walmart CEO Mike Duke [8]

As Walmart’s sales growth continued its trend downward, new CEO Doug McMillon was tapped in 2014 to implement a new e-commerce, digital and technology focused strategy. In fact, for the first time since Walmart became a publicly traded company in 1970, annual sales shrank for the first time in 2015. McMillon was asked why did it take so long for Walmart to get into e-commerce and if the profitability of their original model affected its urgency to change. McMillon responded.

“We wish we had been more aggressive early on, no doubt. In some ways we experienced what Clay Christensen calls the ‘innovator’s dilemma.’ We hired talent, invested, and just kind of meandered along rather than hammering down, being aggressive, and making it a must-win aspect of our business. That’s partly because we had a bird in hand. We knew that if we continued to open Walmart Supercenters, they would do well.” – Walmart CEO Doug McMillon [9]

McMillion, true to his mandate, made a splash by acquiring online retailer for 3.3 billion in cash and stock. The deal is reported to be the largest ever purchase of a U.S. e-commerce startup [10]. There were multiple reasons stated by the company for making a splashy purchase of this nature. However, the crown jewel of the acquisition was the procurement of e-commerce wunderkind Marc Lore who was immediately tapped to head both and

Marc Lore established his digital retailing bona fides by founding Quidisi. The start up was known for its and sites amongst others. Quidisi was sold to Amazon in 2010 for $550 million. The purchase of Quidisi at the time was an attempt by Amazon to stifle competition.

“Amazon was slashing the price on diapers on its own site, putting pressure on Quidsi’s margins and making outside investors hesitant to put in more money. Furthermore, Amazon promised to keep dropping prices if Quidsi sold to Wal-Mart.” [15]

Lore stayed at Amazon for two years and then left to ponder his next move. Subsequently, in 2014 Lore founded based upon the premise of charging members a yearly fee, encouraging consumers to buy in bulk and incentivizing consumers to purchase items from the same distribution center to lower product prices. On the strength of his name and new business model, Lore was able to raise $500 million in investment capital on this venture. Lore earned $243.9 million in 2016 making him the highest compensated CEO in the United States after the sale. Expect Lore to be at Walmart for at least five years, as he will lose substantial compensation if he exits beforehand.

Walmart previously missed out on buying Quidisi in 2010 as both Walgreens and Amazon were in a bidding war for Lore’s e-commerce property. Walmart decided with the acquisition that they were not going to lose an opportunity to buy Marc Lore’s services again.

How Will Walmart Benefit from


In just one year of operation, scaled up to 12 million different products and reached a run-rate of $1 billion in gross merchandise value [11]. With this acquisition, Walmart is buying additional diversity of online product offerings. The brands that offers are those that appeal to consumers that reside outside of Walmart’s more suburban, rural, older cost conscious demographic.’s brand positioning is targeted to younger, “urban”, millennials who constitute a faster growing demographic than the demographic that Walmart has traditionally attracted. Walmart plans to keep the brand identity separate from has relationships with more upscale brands that may not want to sell their products on Additionally, this brand separation helps maintain Jet’s appeal to higher income consumers.

According to CNBC, shoppers are more likely to have $150,000 and up incomes. Additionally, only 20% of buyers also purchased from in the past six months (as of August 8th, 2016) [12]. There was little overlap between the customer bases of both companies making the acquisition by Walmart highly attractive. Furthermore’s innovative supply chain business model and focus on low prices dovetailed with Walmart’s penchant for supply chain innovation and focus on low prices. Here is how Marc Lore described the company’s novel “smart cart” business process:

“Here’s how it works: If you have two items in your cart which are both located in the same distribution center and can both fit into a single box, then you will pay one low price. If you add a third item that is located at a different distribution center and cannot be shipped in a single shot with the other two items, you will pay more. As you shop on the site, additional items that can be bundled most efficiently with your existing order are flagged as ‘smart items’ and an icon shows how much more you’ll save on your total order by buying them.”

It should be noted that Jet was experiencing a high cash burn rate prior to being acquired by Walmart. dropped its annual $50 membership fee which caused it to lose money on every shipment. The advantage of being acquired by a deep pocketed industry player like Walmart was to help alleviate the stress of private fund-raising for an unprofitable company [13].

Walmart has to allow to maintain its startup, entrepreneurial culture or risk losing talent. For instance, Walmart’s conservative, southern influenced culture clashed with the office drinking, happy hour culture of Hoboken New Jersey based Walmart eventually reversed course and did not impose this “in-office prohibition” rule on subsequent startup acquisitions. However, the more conservative Walmart did ask Jet employees to be mindful of swearing in the office [14]. has the potential to infuse Walmart with much needed digital innovation. This fresh perspective has the potential to add tremendous value to the organization as a whole. The “old guard” rooted in Walmart’s core business model needs to allow acquisitions to thrive instead of imposing the more conservative legacy culture. According to CEO McMillon, the core business itself must learn to become more digital.

“The people who run the older parts of our business must also become digital. We can’t have some people live in yesterday while others live in tomorrow. And given the effects of inertia, we need people to lean into the future even more than other companies might. We’re trying to move large numbers of people to change their established habits.” [9]

E-Commerce Executive Shakeup

There was an immediate shakeup in the executive ranks once the acquisition materialized. Neil Ashe, Walmart’s global e-commerce head previously ran CBS Interactive and had been named head of technology shortly before the acquisition, was transitioned out to make room for Marc Lore. Lore will assume the title of president and CEO of e-commerce at Walmart. Lore will head not only but also all of Walmart’s e-commerce functions. Also leaving is Michael Bender, Walmart’s global e-commerce COO.

Fernando Madiera who previously headed and was previously CEO of Walmart’s Latin American e-commerce business was transitioned. Mr. Madiera had just taken the post in 2014. Other high level executives that transitioned were Dianne Mills, senior vice president of global e-commerce human resources; and Brent Beabout, senior vice president of e-commerce supply chain. Not even Wal-Mart’s chief information officer Karenann Terrell was spared, as she left the company late February of 2017.

Key executives from that will join Marc Lore’s new team include Scott Hilton who was previously chief revenue officer at co-founder Nate Faust will become the senior vice president for U.S. eCommerce and supply chain for Walmart’s domestic operations.

The point of this game of executive musical chairs is to provide Marc Lore with the executive team he deems necessary to launch an effective attack on Amazon’s e-commerce dominance. Walmart has 3.3 billion reasons to make sure Lore feels he has the necessary team in place to win.

Walmart & E-Commerce Timeline

  • February 2016: purchases online furniture retailer for $90 million. The move is seen as way for to acquire revenue growth. Of note, the Hayneedle CEO (John Barker) received a parachute package worth $3.4 million while other employees saw their investment stakes effectively wiped out.
  • August 2016: Walmart purchases for $3.3 billion. The deal is reported to be the largest ever purchase of a U.S. e-commerce startup.
  • January 2017: purchases Boston based ShoeBuy for $70 million. The purchase increases Jet’s online catalogue of items substantially and will allow the same items to be sold across, and
  • February 2017: Walmart purchases hip Michigan based outdoor retailer Moosejaw for $51 million. Moosejaw sells brands like Patagonia and North Face online and in its 10 brick and mortar stores. Moosejaw has expertise in online sales and social marketing that Walmart wishes to tap. Moosejaw and Its 350 employees will continue to exist as a standalone subsidiary.
  • March 2017: purchases women’s online clothing retailer Modcloth for $75 million. The site caters to size diversity and body positivity. The acquisition represents an attempt to appeal to a younger, hipper demographic than Walmart currently courts.
  • March 2017: Walmart launches a Silicon Valley based tech incubator called Store No. 8. The initiative is named after a store where Sam Walton was known to experiment. Walmart plans to invest in businesses like a venture capitalist firm would and then grow this group of startups as a portfolio. “The incubator will partner with startups, venture capitalists and academics to promote innovation in robotics, virtual and augmented reality, machine learning and artificial intelligence, according to Wal-Mart. The goal is to have a fast-moving, separate entity to identify emerging technologies that can be developed and used across Wal-Mart.” [18]
  • June 2017: Walmart purchases NYC based men’s clothing retailer Bonobos for $310 million. The brand started modestly by selling chino pants and expanded its line of offerings for sale in its own stores and in Nordstroms. “Its co-founder and chief executive, Andy Dunn, will oversee Walmart’s digital brands, which also include the independent women’s brand ModCloth.” [16] Passionate Bonobos fans have mocked the acquisition on social media snarkily asking if the popular chinos will be refitted for the average Walmart customer.  Bonobos has a vertically integrated supply chain as it designs and manufactures all products in-house, which allows it to cut out middlemen costs [17]. Walmart is eager to tap founder Andy Dunn for his expertise in this area.

Peddling upscale merchandise will allow Walmart to expand its reach from low and middle income consumers to a more affluent base. As middle income consumers slowly shrink, Walmart is diversifying its customer base.

“Between 2000 and 2014, middle-class populations decreased in 203 of the 229 metropolitan areas reviewed in a Pew Research Center study. In an economically divided America, Walmart has tried to sell not only to shoppers looking for extreme discounts, but also to shoppers with higher incomes seeking higher-quality items. Walmart has been working to increase its sales to more affluent customers for years, especially in e-commerce.” [19]


Walmart’s e-commerce strategy appears to be reaping dividends as of the writing of this post. As mentioned earlier, Walmart stated that its e-commerce sales had increased 64% domestically in the first quarter of 2017.

For years, Walmart has dominated the retail space with its low cost/low price strategy (see my Micheal Porter post). In today’s e-commerce environment, the key is to compete on low prices and convenience, as well as appeal to diversified income groups. Only time will reveal if Walmart has the innovative capacity and leadership to overtake Amazon. The company is making bold bets in the e-commerce space and is aware of the shift in consumer preferences.

Walmart’s core business must be willing to be disrupted by its internal innovators. The current retail landscape is one of declining profits and closing stores. The organization as a whole must not be ideologically wedded to its massive assortment of physical stores while ignoring threats from outside competitors (namely Amazon).

Additionally, Walmart cannot ignore fresh retail ideas emanating from internal disrupters like Marc Lore, Andy Dunn or successful Store No. 8 startups if they materialize. The company must cross-pollinate successful ideas and quickly post-mortem and move on from unsuccessful ones. If Walmart continues to buy online growth at the expense of organic growth, then it must ensure that it does not continually overpay for growth and assets. If its e-commerce acquisitions underperform or sustain large losses, this can harm Walmart’s market position and financial performance.

For more Walmart coverage please check out Part 1Part 2 and Part 3 of my series on Walmart’s overall technology strategy, where I address areas such as:

  • Strategy for Technology Infrastructure
  • Strategy for IT Capability & Staffing
  • Strategy for Information Risk & Security
  • Strategy for Stakeholder Requirements, Testing & Training/Support
  • Project ROI and Key Success Measures
  • Strategy for Data Acquisition and Impact on Business Processes
  • Strategy for Social Media/Web Presence
  • Strategy for Organizational Change Management, Project Strategy and Complexity

If you’re interested in Business Intelligence & Tableau check out my videos here: Anthony B. Smoak


[1] Kaufman L. & Deutsch, C. Dec 29, 2000. Montgomery Ward to Close Its Doors. New York Times.

[2] Abrams, R., May 18 2017. Walmart, With Amazon in Its Cross Hairs, Posts E-Commerce Gains. New York Times.

[3] Yohn, D., March 21, 2017. Walmart Won’t Stay on Top If Its Strategy Is “Copy Amazon”. Harvard Business Review.


[5] The Economist. June 2, 2016. Walmart: Thinking outside the box. As American shoppers move online, Walmart fights to defend its dominance.

[6] Levy, A. April 24, 2017. Is Wal-Mart’s New E-Commerce Acquisition Strategy Any Better Than Its Old One?

[7] Edwards, J. May 27, 2014. Some Employees Are Furious At Management Payouts In Walmart’s Big Adtech Acquisition.

[8] Lutz. A. Dec 12, 2012. Walmart CEO Mike Duke Shares His Biggest Regret. Business Insider.

[9] Ignatius, A. March 2017. “We Need People to Lean into the Future”. Harvard Business Review.

[10] Nassauer, S. Nov 1, 2016. Wal-Mart E-commerce Executives Depart in Wake of Purchase. Wall Street Journal.

[11] Gustafson, K. August 8, 2016. Wal-Mart: This is why is worth $3.3 billion. CNBC.

[12] CNBC Interview with Marc Lore. Aug, 9. 2016.

[13] Abramsaug, R. & Picker, L. August 8, 2016. Walmart Rewrites Its E-Commerce Strategy With $3.3 Billion Deal for New York Times.

[14] Baskin, B. & Nassauer, S. June 25, 2017. It’s 5 O’Clock Somewhere—Unless You’ve Been Acquired by Wal-Mart. The retailing giant bought for $3.3 billion, then had to cope with its weekly happy hour. Wall Street Journal.

[15] Levy, A. August 9, 2016. Why Wal-Mart couldn’t let’s founder get away…again. CNBC.

[16] de la Merced, M. June 16, 2017. Walmart to Buy Bonobos, Men’s Wear Company, for $310 Million.

[17] Sergan, E. June 19, 2017. Bonobos Founder Andy Dunn Knows You Might Be Mad At Him For Joining Walmart. Fast Company.

[18] Soper, S. March 20, 2017. Wal-Mart Unveils ‘Store No. 8’ Tech Incubator in Silicon Valley Bloomberg.

[19] Taylor, K. March 24, 2017. Walmart’s latest move confirms the death of the American middle class as we know it. Business Insider.

Photo Copyright: moovstock / 123RF Stock Photo

More Than You Want to Know About Wal-Mart’s Technology Strategy Part 3

This article is the final piece and a continuation of my earlier analyses (Part 1, Part 2) where I waded into Wal-Mart’s strategy for information risk & security, stakeholder requirements and project ROI. Whether you love or hate Wal-Mart, no one can argue that historically the organization has been highly innovative, effective and efficient. In this third part of my three part series I will broach the company’s strategy for data acquisition, social media, and project execution.

Wal-Mart: Strategy for Data Acquisition and Impact on Business Processes:

Wal-Mart has always been on the forefront of how an organization acquires, handles and shares data with internal and external parties. The company’s information technology spans across their 11,500 stores operating under 63 banners in 28 countries and e-Commerce websites in 11 countries (Wal-Mart Stores, Inc, 2015). This diverse assortment of digital and traditional brick and mortar assets services 260 million customers. The company’s sprawling POS system must remain highly operable and robust enough to harvest daily sales data across its global footprint. In order to accommodate data from a substantial customer base of millions of shoppers, the company must have the requisite back end storage infrastructure. As of 2015, Wal-Mart is embarking on a plan to build a massive private cloud which is expected to make 40 petabytes of data available everyday (Buvat et al., 2015). From a strategic standpoint the in-house cloud build-out makes sense, as employing Amazon Web Services would be making the company reliant on a key competitor’s technology offering to house sensitive data.

The data acquired from its POS systems allows the company to better allocate its product mix in real time. For example, on “Black Friday”, which is typically the busiest shopping day of the year, the company’s buyers mine the day’s sales data as early as 6am on the East Coast in order to optimize the company’s product offerings for the day (Sullivan, 2004).

From a data acquisition perspective, Wal-Mart pioneered the use of bar code scanners. The usage of scanners and Universal Product Codes was not just to register the price and make the cashier’s job of processing customers faster (as its early competitors had used the technology); Wal-Mart realized that bar codes enabled the company to determine where and how sales were made. In order to link POS, inventory and supply chain management data together with headquarters, the company invested in its own personal satellite system in 1984 (Sherman, 2013). This investment impacted in-store business processes as analytics could be run against purchase data to determine customer market basket mix and product to product correlations. Being on the forefront of purchasing data analytics allowed the company to more effectively place products in-stores that customers demanded.

This information linkage enabled by Wal-Mart’s satellite investment also led to profound business practice impacts with respect to its supply chain management process. As mentioned earlier in this analysis, with the development of Retail Link, Wal-Mart led the industry by providing first P&G and then the rest of its supplier network with direct visibility to real time store-shelf data. This was a highly innovative move as suppliers and internal buyers could work together on “forecasting, planning, producing, and shipping products as needed” (Sherman 2013). Enabled by its new technology system, the data sharing of information between supplier partners allowed those suppliers to manage inventory at Wal-Mart stores with a more comprehensive understanding of product demand, while Wal-Mart benefited from lower inventory storage costs.

Wal-Mart: Strategy for Social Media/Web Presence:

Wal-Mart operates e-commerce web presences across 11 different countries. Although it is by far the biggest brick and mortar retailer in the world, it has struggled to compete with online “e-tail”, competitors such as Amazon and Target. Updating its digital know-how and refreshing its digital properties will be a requirement in order to keep pace in a shifting industry dynamic. To this end, Wal-Mart has embarked upon a number of strategies to keep itself relevant and enhance its digital capabilities. The company is leveraging its web properties to not only analyze purchasing behavior but also review customer search histories and customer social media interactions. The latter activities are aimed at boosting its online sales and predicting customer demand for its brick and mortar locations.

“Teams at WalmartLabs use visualization techniques to analyze social activity to capture insights that may indicate changes in product demand. Walmart can then use these insights to stock extra inventory at locations where it expects higher demand and reduce it from locations with lower demand” (Buvat et al., 2015).

Wal-Mart has also embarked upon a strategy of purchasing startup companies with the intention of adding to the retailer’s knowledge in the mobile, analytics and social media realm. The retailer purchased a company called Kosmix, whose founders had sold a digital company to Amazon in the late 1990’s. Kosmix is a social media data aggregator which analyzes data from Twitter and other social networks with the aim of helping the company understand the relationship between customers and products. Shortly after the Kosmix acquisition, a small team at @WalmartLabs prototyped a new search capability code-named “Polaris”. Polaris helps to determines customer intent when embedded within “As a result, if a user types in the word ‘denim’, it returns results on ‘jeans’ while ‘chlorine tablets’ returns results related to pool equipment (Ribiero, 2012). Within 9 months the prototype was production ready as it replaced an Oracle based product (Endeca) whose search functionality was simply keyword based. The company claims that it sees a 10% – 15% boost in shoppers completing a purchase using the Polaris search algorithm.

One recent splashy acquisition in the e-tail space involved Wal-Mart’s purchase of for 3 billion in cash. Wal-Mart realizes that customer preferences have shifted to the online retailer space while Wal-Mart has a substantial legacy footprint in brick and mortar locations. According to the Wall Street Journal, “The retailer gains access to a larger group of young, wealthy, urban shoppers through Jet” (Nassau, 2016). The company also gains access to a startup minded employee talent base, startup executive experience and’s proprietary pricing software and customer data.

Additional social project activities employed by Wal-Mart include adding a ratings review capability to its products on and a partnership with Facebook to offer individual pages for each of the retailer’s 3,500 stores. The company has also used the hashtag #lovedata to appeal to potential technology hires.

From an employee social engagement perspective, Wal-Mart developed an internal web site called with the aim of developing an employee social media community where employees are allowed to blog and answer questions related to the company. Roughly 75% of the company’s 1.4 million U.S. based associates log on to the site (Tuttle, 2010). This effort required integrating multiple disparate websites running on different web platforms (for example payroll and benefits sites).

It should be noted that although the company is taking positive steps in the social media space, its initial attempts in the early 2000’s were clumsily executed. “Its Walmarting Across America blog in 2006, about two Wal-Mart enthusiasts traveling around the U.S. in an RV, was revealed to be less than authentic when it was learned that Wal-Mart paid for the flights, the RV and the gas of the two protagonists. ‘The Hub,’ a MySpace-like clone, closed in October 2006, just 10 weeks after it launched, while a Wal-Mart sponsored Facebook group reportedly had lackluster results” (Edelson & Karr, 2011).

Wal-Mart: Strategy for Organizational Change Management, Project Strategy and Complexity:

Best practice project management principles for handling complexity include implementing risk management practices and analyzing project risk/rewards. This series has already addressed Wal-Mart’s heavy reliance on ROI as a measure of project success. But Wal-Mart also has the advantage of running a common information systems platform for its global operations. This has allowed the company to offset the higher costs of developing in-house systems by building a system once and then rolling it out along with the respective business processes enterprise wide.

The company also lowers IT project complexity by closely examining the current process that the system is supposed to improve. This activity has been described by former CIO Kevin Turner as “eliminate before we automate”.

“Eliminate steps, processes, reports, keystrokes; eliminate any activity that you possibly can for two reasons: One, you’ll end up building a whole lot better system that’s easier to support, and two, invariably you will have a better solution that’s more [user] friendly” (Lundberg, 2002).

Once the system is built, then a piloting phase occurs amongst the stores, distribution centers and customers that will present the most challenges. If the challenges are caught and addressed by pilot builds in the most trying situations, then installing at less challenging locations should experience minimal interruptions.

From an Enterprise Risk Management standpoint Wal-Mart uses a 5 step process that allows its ERM group to work with the business to mitigate many of the risks that the company faces. “The five-step ERM process involves: 1. risk identification, 2. risk mitigation, 3. action planning, 4. performance metrics, and 5. shareholder value” (Atkinson, 2003).

An additional project strategy is to funnel all IT projects through the central IT office with a single enterprise-wide portfolio overseen directly by the CIO. King (2014) asserts that objectively ranking projects by using an automated spreadsheet tool helps to eliminates politically-driven decisions. Resources are assigned to projects based upon criticality and available funds. When available employees and funds are exhausted for the quarter, remaining projects on the list do not make the cut. Technology resources are asked to remain flexible as they rotate to different jobs within the company to gain additional skills. The flexibility of IT resources is a boon to change management plans as resources can be swapped out without minimal interruption to the overall project plan.

In case you missed something, make sure to revisit Part 1 & Part 2 of the series.

If you’re interested in Business Intelligence & Tableau check out my videos here: Anthony B. Smoak


Atkinson, W. (December, 1, 2003). Enterprise Risk Management at Wal-Mart. Risk Management. Retrieved from Factiva.

Buvat, J., Khadikar, A., KVJ, S. (2015). Walmart: Where Digital Meets Physical. Capgemini Consulting. Retrieved from

Edelson, S., & Karr, A. (April, 19, 2011). Wal-Mart to Buy Kosmix. Retrieved from Factiva.

King, R. (October 2014). Wal-Mart Becomes Agile But Finds Some Limits. Dow Jones Institutional News. Retrieved from Factiva

Lundberg. A. (July 1, 2002). Wal-Mart: IT Inside the World’s Biggest Company. CIO magazine. Retrieved from–it-inside-the-world-s-biggest-company.html?page=2

Nassau, Sarah (2016). Wal-Mart to Acquire for $3.3 Billion in Cash, Stock. Wall Street Journal

Sherman, Richard J.. ( © 2013). Supply chain transformation: practical roadmap to best practice results. [Books24x7 version] Available from

Ribeiro, J. (August 31, 2012). Walmart rolls out semantic search engine, sees business boost. Retrieved from–sees-business-boost.html

Sullivan, L. (September 24, 2004). Wal-Mart’s Way: Heavyweight retailer looks inward to stay innovative in business technology. Retrieved 6/17/16 from

Tuttle, D. (February, 17, 2010). Wal-Mart’s social media community earns accolades. Retrieved 6/17/16 from Factiva

WAL-MART STORES, INC. (January 31, 2016). FORM 10-K. Retrieved from

Photo Copyright: dutourdumonde / 123RF Stock Photo

More Than You Want to Know About Wal-Mart’s Technology Strategy Part 2

This article is a continuation of my earlier analysis (Part 1 here, continued here at Part 3) where I waded into Wal-Mart’s strategy for technology infrastructure and strategy for IT capability & staffing. Whether you love or hate Wal-Mart, no one can argue that historically the organization has been highly innovative, effective and efficient. In this second part of my three part series I will broach the company’s strategy for information risk and security, stakeholder requirements and project return on investment.

Wal-Mart: Strategy for Information Risk & Security:

Wal-Mart operates a massive information system infrastructure that has been called the largest private computer system in the country. As such, the company must be strategic in implementing the proper information security protocols and vigilant in order to react to attempted compromises to its confidential information. Any compromise of sensitive customer information could lead to a significant expense in compensating affected parties and lead to updating systems, processes and procedures to restore customer confidence. This scenario is especially relevant as Wal-Mart’s extensive point of sale system, from a black hat hacker’s perspective, registers a veritable treasure trove of customer debit, credit and gift card information.

In order to mitigate the aforementioned risks, Wal-Mart has complied with the PCI DSS or Payment Card Industry Data Security Standard. PCI DSS offers, “compliance guidelines and standards with regard to our (Wal-Mart’s) security surrounding the physical and electronic storage, processing and transmission of individual cardholder data” (Wal-Mart Stores Inc., 2016). Some operational system components of PCI DSS include maintaining a secure network via use of firewalls to protect sensitive data, encrypting cardholder data that is transmitted across public networks, regularly updating anti-virus software as well as tracking and monitoring all access to network resources and cardholder data. (PCI Security Standards Council, 2016). Former CIO Turner has stated, “Necessity is the mother of invention, and we’ve invested a lot of knowledge and capital in intrusion detection and playing as much offense as we can to make sure that we’re protecting our company. Personally, every day I spend time on security” (Lundberg, 2002).

From a disaster recovery perspective, Wal-Mart maintains redundant primary and secondary information systems to mitigate the risks of operational downtime and/or significant loss of information. The organization keeps primary and secondary information systems physically separated. In 2005, the company was lauded for its disaster recovery and business continuity efforts in the wake of Hurricane Katrina. The company stood up satellite links for its retail centers enabling those centers to correspond with headquarters despite the loss of phone lines and internet connectivity (Worhten, 2005). Wal-Mart also maintains an Emergency Operations Center (EOC) established in the wake of the September 11, 2001 terror attacks. The organization has a central EOC located at headquarters in Arkansas which works in concert with decentralized EOCs at a division level. During Hurricane Sandy, the organization was successful in moving generators across state lines in order to reopen stores and provide systems operability in a timely manner (PricewaterhouseCoopers, 2005).

Wal-Mart: Strategy for Stakeholder Requirements, Testing & Training/Support:

Wal-Mart’s immense size allows it considerable influence over its supplier stakeholders. Typically, suppliers reside in an inferior position (Wal-Mart can end the supplier relationship or demand sub-optimal concessions from the supplier) which enables the retailing behemoth to dictate industry wide changes in how suppliers and merchants interact. This unbalanced power relationship allows the company to micromanage its supply chain partners from a business process and respective information technology project perspective. When the power balance is more on an equal footing, Wal-Mart is willing to work collectively with a supplier.

Case in point is the lauded cooperation between Procter & Gamble and Wal-Mart in the late 1980’s to implement Retail-Link. Retail-Link was a joint business process and related technology systems project between the two organizations for mutually beneficial gains. Wal-Mart’s in-store point of sale data acted as a pull to automatically trigger manufacturing orders to P&G when stocks were low (Wailgum, 2007). When this concept proved successful, Wal-Mart dictated to 2,000 supplier stakeholders that they must all update their information systems to integrate with Retail-Link. The integration and information sharing with Retail-Link was a boon to Wal-Mart’s suppliers as it provided predictable volumes and constantly humming factories, but the takeaway is that Wal-Mart mandated the terms to stakeholders based upon its asymmetrically favorable power position.

In some cases, Wal-Mart’s technical project mandates to suppliers did not yield mutually beneficial Return on Investment (ROI). An example of this scenario is embodied in the much publicized initiative to have its suppliers adopt RFID in the mid 2000’s. Wal-Mart was seeking to increase its inventory visibility at the warehouse and in its stores. In this case, Wal-Mart did not adequately consider stakeholder technology implementation concerns before issuing its RFID mandate. A supplier is on record stating that the consumer packaged goods industry was not the best early adaptor for RFID and that the small margins and project complexities didn’t offer compelling ROI (Wailgum, 2007). The ROI that could be established from a supplier standpoint was to continue doing business with Wal-Mart while only investing the bare minimum in upgrades required to implement RFID. A Gartner analyst has estimated that the implementation costs of RFID for smaller companies would cost between $100,00 to $300,000, while larger manufacturers could experience investment costs of up to $20 million (Network World, 2008).

Once a critical mass of important supplier stakeholders decided that their operating costs were being negatively impacted, Wal-Mart decided to back down from its mandate. Only when the favorable power dynamic shifted from Wal-Mart to the supplier network, did the company walk back its mandate.

From a development standpoint, Wal-Mart traditionally used the more structured Systems Development Lifecycle (SDLC) methodology. All systems within the company require testing & validation. According to former CIO Turner, “In any development effort, our [IS] people are expected to get out and do the function before they do the system specification, design or change analysis. The key there is to do the function, not just observe it. So we actually insert them into the business roles. As a result, they come back with a lot more empathy and a whole lot better understanding and vision of where we need to go and how we need to proceed” (Lundberg, 2002). Turner also eschews testing systems in low volume stores or with the easiest customers.

Recently, in its more cutting edge Silicon Valley based development division (@WalmartLabs) the company has moved to adopt an Agile development methodology. Agile methodology allows the group to react faster to changing market conditions with respect to the much slower SDLC methodology. This approach is necessary in a cut-throat marketplace where competitors such as Amazon have been using Scrum for over a decade (King, 2014).

Wal-Mart: Project ROI and Key Success Measures:

Despite the less than successful analysis and grasp of intended project benefits related to its RFID initiative, Wal-Mart relies heavily on ROI as a measure of project success. Cost is a major driver of IT related expenses thus a reliance on ROI is a sensible approach. Former CIO Turner has stated that 33% of Wal-Mart development projects are canceled before they are completed and that 56% of completed projects are subjected to budget overruns of 189%. “One of the problems is that a lot of companies don’t require an ROI except for major purchases. ‘At Wal-Mart, everything has to pay its way, even infrastructure [investments]. A lot of people say you can’t cost-justify infrastructure, but you can. There is a way. You have to make ROI the center of what you’re about, to begin to pay your way’” (Power, 1998). At Wal-Mart all technology implementations are assigned a payback analysis and the savings from the analysis must be incorporated into the business plan. A quarterly report on each project is shared at the executive level to ensure that business unit profit and loss statements reflect the investment value that was initially calculated. The mentality at Wal-Mart is a focus on turning information technology from a traditional cost center to a profit center.

Additionally, the centralized information technology group at Wal-Mart does not saddle its divisions with a chargeback funding method. The company takes a holistic enterprise wide view approach with respect to determining which projects make sense for the company. Wal-Mart can be said to employ the corporate budget funding method where IT managers have considerable control over the entire IT budget. When it’s time to implement a project, the divisions with the largest budgets are treated the same as divisions where resources are more scarce. As of 2004, the organization lacked an IT steering committee which helped speed up the project selection process (Sullivan, 2004). The drawback to this funding method approach is that IT competes with all other budgeted items for funds (Pearlson, Galletta & Saunders, 2016).

Project completion dates in the organization’s nomenclature are referred to as “end dates”. All projects are tracked against the end dates and problem projects are scrutinized when they fall behind schedule. When new systems are deployed it is not uncommon for high level management to solicit feedback from line employees involved in using the system. When necessary, personnel are replaced on project teams in order to increase project effectiveness (Lundberg, 2002).

To be continued in Part 3 where I address these three areas:

  • Strategy for Data Acquisition and Impact on Business Processes
  • Strategy for Social Media/Web Presence
  • Strategy for Organizational Change Management, Project Strategy and Complexity

If you’re interested in Business Intelligence & Tableau check out my videos here: Anthony B. Smoak


King, R. (October 2014). Wal-Mart Becomes Agile But Finds Some Limits. Dow Jones Institutional News. Retrieved from Factiva

Lundberg. A. (July 1, 2002). Wal-Mart: IT Inside the World’s Biggest Company. CIO magazine. Retrieved from–it-inside-the-world-s-biggest-company.html?page=2

Network World. (September, 2008). “Wal-Mart’s RFID revolution a tough sell; Even for the world’s biggest retailer, championing an unproven technology with no clear ROI has been difficult” Retrieved from Factiva on June 13/16

PCI Security Standard Council. (2016). Maintaining Payment Security. Retrieved from

PricewaterhouseCoopers. (September, 2013). Interview with Mark Cooper. Walmart takes collaborative approach to disaster recovery. Retrieved from

Power, D. (June, 1998). WAL-MART: TECHNOLOGY PAYBACK IS IMPERATIVE. Supermarket News. Retrieved from Factiva

Pearlson, K., Galletta, D., & Saunders, C. (January, 2016). Managing and Using Information Systems: A Strategic Approach, Binder Ready Version, 6th Edition

Sullivan, L. (September 24, 2004). Wal-Mart’s Way: Heavyweight retailer looks inward to stay innovative in business technology. Retrieved 6/17/16 from

Wailgum, T. (October 2007). How Wal-Mart Lost Its Technology Edge. Retrieved from

WAL-MART STORES, INC. (January 31, 2016). FORM 10-K. Retrieved from

Worthen, B. (November 1, 2005). How Wal-Mart Beat Feds to New Orleans. CIO Magazine.Retrieved from

More Than You Want to Know About Wal-Mart’s Technology Strategy Part 1

Wal-Mart has long been associated with innovations in its home-grown information technology systems, which in turn have exerted tremendous influence on its business strategy of everyday low prices. The company was a pioneer in bar code scanning and analyzing point of sale information which was housed in its massive data warehouses. Wal-Mart launched its own satellite network in the mid 1980’s which led to profound business practice impacts with respect to its supply chain management process. Strategic systems such as Retail-Link, spearheaded by industry luminary Kevin Turner, enabled data integration and sharing between Wal-Mart and its suppliers. These systems also enabled the concept of vendor managed inventory. However, not every technology project in which the company invests significant resources turns to gold as Wal-Mart encountered missteps with its RFID technology initiative. Despite the less than stellar ROI and supplier adoption rate of RFID, that effort demonstrated the willingness of its technology to push the envelope in exerting tremendous changes on business processes not only within Wal-Mart but throughout the industry.

Storm clouds are on the horizon as consumer preferences change from “big-box” brick and mortar stores to online retail platforms such as Amazon. To counter Amazon’s online dominance, the company must continue to invest in its digital know-how. Adding new capabilities to its online presences and refreshing its digital properties will be a requirement in order to keep pace in a shifting industry dynamic.

Wal-Mart: Strategy for Technology Infrastructure:

Wal-Mart’s architectural philosophy can be classified by the twin sentiments of “build rather than buy” (the organization has historically held the belief that their information systems provide a competitive advantage over other industry players) and one of innovation. Recently, as consumer preferences have shifted away from “big-box” brick and mortar stores to the convenience of online “e-tail”, competitors such as Amazon and Target have begun to erode Wal-Mart’s retail dominance. In order to react, Wal-Mart has been allocating resources to invest in digital capabilities that will allow the organization to effectively compete and become better aligned with consumer shopping preferences.

Historically, Wal-Mart’s information technology strategy has long favored an internal “build rather than buy” approach which has spawned innovative business strategies. Wal-Mart prefers to build in house strategic systems that allow the company to gain competitive advantages. Retailers are known to prefer home-grown systems and Wal-Mart’s immense size has traditionally been a hindrance in running off the shelf packages (Wailgum, 2007). Globally, the company runs a heavily modified version of IBM’s elderly point of sale (POS) supermarket application at all of its checkouts with the exception of Japan (Zetter, 2009). The in-house systems approach has been a source of competitive advantage for Wal-Mart. “Wal-Mart was a pioneer in applying information and communications technology to support decision making and promote efficiency and customer responsiveness within each of its business functions and between functions” (Ustundag, 2013).

The advantage of an in-house strategic system is that it offers tight alignment between the company’s business strategy and the finished solution. Another advantage of in-house strategic systems as opposed to running off the shelf packages from third parties is the ability to keep proprietary business process and systems knowledge out of the hands of competitors. A third party developer would have no problem advertising a system that was in use at Wal-Mart and then selling that system to competitors. The advantages of the in-house development approach must be weighed against the downsides, namely the higher cost of development and the internal staffing required for new innovative development and on-going maintenance.

Recently, as Wal-Mart tries to use its geographic reach and existing retail infrastructure to compete with Amazon, it is making a move to ramp up its cloud based technology assets. In keeping with its “build rather than buy” approach, the company built its own data centers and developed supporting cloud based commerce applications using open source tools. “‘We took back control of the technology and largely built it ourselves,’ explained Jeremy King, chief technology officer for global e-commerce at Walmart” (Lohr, 2015). Additionally, as of 2015, the company is in the middle of an IT systems overhaul called Pangaea that “includes a hybrid cloud platform and search technology” (Nash 2015). King, in keeping with the Wal-Mart approach has stated, “Most people don’t replace entire systems in one shot, especially with from-scratch development…but given how rapidly this place is changing, we didn’t have time to screw around” (Nash 2015).

Wal-Mart: Strategy for IT Capability & Staffing:

Wal-Mart is not a technology company, but it is a company in which technology is a key enabler of business strategies. Since technology has been a crucial component of the organization’s competitive advantage, its IT governance archetype can be characterized as an IT duopoly. The IT duopoly arrangement allows technology executives and business unit leaders to collaborate on technology projects and decisions. Kevin Turner, who was a Wal-Mart vice president for application development, a former CIO and the current CEO of Citadel Securities, has stated that technology payback figures for Wal-Mart initiatives are put into writing, “which in turn requires the affected business units to acknowledge savings and work them into their business plan — or dispute the savings and work with the IT department toward a resolution” (Power, 1998). “‘Do the [business units] always agree with us? No. Will they work with us? Yes. If they don’t, we won’t do anything more for them in the future. And I’ll tell you, that works,’ said Turner” (Power, 1998).

Traditionally, Wal-Mart’s IT staff have a background in other non-technology areas of the business. The company looks to promote its staff out of the IT department which allows a technological “cross-pollination” of knowledge to occur across the organization. When Wal-Mart is looking to develop new systems it dispatches its top engineers to perform “regular” operations jobs so they can gain working hand knowledge of the challenges that line employees face (Boyer, 2003).

As Wal-Mart has looked to withstand new online retail challenges from chief competitors Amazon and Target, its technology staffing mix and organizational structure have had to adapt in order to remain competitive. Former CEO Mike Duke was looking to combine the organization’s stores, information technology assets and logistics expertise into one channel in order to drive growth (Buvat, Khadikar, & KVJ, 2015). Wal-Mart was cognizant that it could not realistically expect the technical staff that it required in order to compete with Amazon, to relocate to Bentonville Arkansas. Therefore, in 2010 Wal-Mart re-organized and consolidated its worldwide e-commerce staff into a new Global division located in Silicon Valley California. Historically, the company has favored a centralized Information Systems structure coupled with an in-house development approach. Former Wal-Mart CIO Turner has stated, “What we’ve come up with is a model of decentralized decisions but centralized systems and controls. We will have a common system and a common platform, but we have to allow a great deal of flexibility in our systems so that the people in those local markets can do their job in the best, most effective way” (Lundberg, 2002).

The new Global E-Commerce initiative is in keeping with that philosophy as the new division’s key responsibilities include, “running Walmart’s ten websites worldwide, building and testing cutting-edge technology at @WalmartLabs, and building Walmart’s eCommerce capabilities” (Buvat et al., 2015). Additionally, in order to bolster its e-commerce staff, Wal-Mart has purchased 14 companies primarily for the purpose of gaining access to engineering personnel. As a result of Wal-Mart’s emphasis on ramping up e-commerce talent, its e-commerce sales grew from 4.9 billion to 12.2 billion dollars between 2011 and 2014; an increase of nearly 150% (Buvat et al., 2015).

To be continued in Part 2 and Part 3 where I address additional areas such as:

  • Strategy for Information Risk & Security
  • Strategy for Stakeholder Requirements, Testing & Training/Support
  • Project ROI and Key Success Measures
  • Strategy for Data Acquisition and Impact on Business Processes
  • Strategy for Social Media/Web Presence
  • Strategy for Organizational Change Management, Project Strategy and Complexity

Also check out The Definitive Walmart E-Commerce and Digital Strategy Post and The Definitive Walmart Technology Review to see how Walmart is ramping up to compete with Amazon.

Finally check out Costco’s Underinvestment in Technology Leaves it Vulnerable to Disruption to learn how Costco currently competes and how the company should compete.

If you’re interested in Business Intelligence & Tableau check out my videos here: Anthony B. Smoak or on Facebook.


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Buvat, J., Khadikar, A., KVJ, S. (2015). Walmart: Where Digital Meets Physical. Capgemini Consulting. Retrieved from

Lohr, S. (October 2015). Walmart Takes Aim at ‘Cloud Lock-in’ Retrieved from

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Power, D. (June, 1998). WAL-MART: TECHNOLOGY PAYBACK IS IMPERATIVE. Supermarket News. Retrieved from Factiva

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