Purpose and operational details

Section 1: Research Question and Methodology

Problem Statement

How does globalization influence the e-commerce growth of Wal-Mart.

Wal-Mart Inc. is multinational retail corporation based out of America. The company has chain of grocery stores, discount department stores and hypermarkets. Sam Walton founded the company in 1962. Wal-Mart has 11000+ stores and 50+ clubs in 28 countries. The company operates with different names in different countries. For example, Wal-Mart is the name in United States and Canada, in United Kingdom its name is Asda (now sold to competitor), Best Price in India, in Central America and Mexico and wholly owned operations in Canada, Brazil, Chile and Argentina. Wal-Mart is famous for its “Every Day Low Price” strategy. The company does this by maintaining lean supply chain strategy (Christopher, 2016).

The forces of globalization have significant impact on e-commerce. These forces have helped the retail giant as well as create issues. Globalization increases the scope of e-commerce. The efficiency, market impacts and coordination are the major forces of globalization (Beck, 2018). The growing telecom and transport links in different world countries is attracting retailers to access new market through e-commerce.

Customer’s changing lifestyle also supports company’s requirements to enter into e-commerce space (Andam, 2014). Wal-Mart is strong in terms of offline retailing. But when it comes to e-retailing, Amazon is big time player. The retailing companies now a days looks at both online and offline aspect of retailing. They look forward to brick and click approach. So Amazon started opening its offline stores like Amazon Go (Amazon, 2015). Moreover, Wal-Mart started following different strategy to enter into e-commerce. The companies have significant presence in US market. The other competitors of Wal-Mart include Target and Sears. But Wal-Mart is far ahead in terms of offline retailing.

Coming over internet retailing, Wal-Mart wants to leverage every opportunity in National and International Market. Wal-Mart has acquired multiple e-commerce company like Jet.com, MosseJow to compete with Amazon.com. Also these partnerships brought out large number of brands in Walmart’s kitty. So Wal-Mart is also acquiring stakes in e-commerce website of India: Flipkart. This shows that company wants to diversify its e-commerce arm in multiple countries.

Research Methodology

Globalization opens the path for companies to enter into world market. It is not additional but must to enter into global arena (Hirst & Bromley, 2015). The report explains how globalization is positively and negative impacting Walmart’s ecommerce. The later section of report discusses different approaches which Wal-Mart can follow to have sustainable competitive advantage in global space. The report analyzes and critically evaluates current e-business strategy of Wal-Mart.

Section 2: Research or Management Report

Globalization Factors Affecting E-commerce

There are multiple factors which can explain how Globalization is impacting E-commerce of Wal-Mart.

Positive Impacts

Expanded Market: The scope of market has increased due to globalization. Wal-Mart will evaluate different e-commerce markets before entering. So it gives Wal-Mart opportunity beyond domestic market. For example, India is huge market that is growing rapidly. India has more than 50 million shoppers in the year 2016 which forms around 14% of full population. However, India has strict policies which say that overseas retail player cannot sell directly to consumer. There is exception in wholesale cash and carry segment. E-commerce segment allows the retailer to make 100% Foreign Direct Investment.

Quotations and referencing

So this is plus point for Wal-Mart. Different countries have different Foreign Direct Investment or retail for multi-brand or single brand retail; this has made Wal-Mart to change its strategies multiple times. The laws and regulations are more flexible now. This has led Wal-Mart to expand e-commerce across multiple countries. However, certain market entries are avoided. For example, the European Market is less attractive for Wal-Mart because of certain characteristics. The retail industry in Europe is mature. So for a new entrant it is difficult to take market share from existing players.

This is difficult task for Wal-Mart. The competitors create entering barriers for new players (Hahn & Youn, 2018). Wal- Mart models are significantly copied in Europe by other players so it would not give competitive edge to the company. If there is some new offering then Wal-Mart can think of tapping E-commerce European market. Globalization also helps in building local distributor relationship, provide free flow of labor and country’s resources are utilized in efficient way (Baylis & Owens, 2017).

Significant Growth Aspects: E-commerce global approach is necessary for its survival and significant growth is possible only in international arena. The United States Market is already saturated and its population is very less as compared to many other countries. So it is necessary for Wal-Mart to not limit its expansion till domestic market. The emerging markets have huge platforms for growth. The disposable income is increasing in some markets. Internet penetration is improved. There are lower trade barriers, increasing homogenization in culture, and expansion of IT (Terzi, 2016). Globalization is providing opportunity in order to meet the competition.

Exchange of technology: The Company would feature different technologies of acquired companies. For example, from Jet.com it will use “smart cat” technology. This technology allows users to pay less if they pack multiple items in one box or opt out of returns or pay through debit card. Investment in new technology and new brands will provide more options to customers and help company to achieve its goals. Also, Wal-Mart has seen many existing players in the different markets. So the attributes of competitors can be easily replicated by Wal-Mart. For example, According to Coreright Research Amazon offers cheap delivery and this is one of the reason shoppers visits its website. This attribute can be easily imitated by Wal-Mart. The company wants to be faster, digital and reshape the portfolio of business for future.

Leveraging resources and competencies: Globalization allows Wal-Mart to use resources and competencies in order to enter global market. The companies generally follow logically sequenced approach to enter into different markets. This will help them to gain learning from the initial market entries and apply it to other. The company needs to understand its distinctive capabilities before entering into world markets. The main agenda is to leverage physical and digital assets. It will improve productivity. Wal-Mart will exploit two main resources which were originally developed in the U.S. (Greenspan, 2015).

One is, it can utilize its huge buying power with giant domestic suppliers like Revlon, Proctor & Gamble, Pfizer, Coke, Nestlé, Hallmark, 3M and Kellogg to procure goods or products from its non-domestic stores cost effectively. It could leverage its competencies and knowledge bases like merchandising skills, effective management and efficient use of technology, I.T. deployment and logistics to benefit its international strategy (Fernie & Sparks, 2014). A positive but unforeseen byproduct of Wal-Mart e-commerce strategy is to utilize cost-reduction or sales-generating ideas in the international market to improve its bottom line.

What to submit

Negative Impacts:

Investment Prospects: The international expansion will require high investment prospects in the country. Although Wal-Mart’s pockets are deep but still it needs to find attractive market for expansion. The investment only makes sense if it could bring profits. For example, e-commerce in India runs at loss for many years due to heavy discounting. This delays the return on investment. This is done for better and stronger business in future.

Different Business Models: Wal-Mart is very famous for offline retailing. There is big difference in online and offline retailing. The company has different business model for different market in offline retailing. For example in China the company is majorly located on highways. In e-commerce, its acquisition of Jet.com has already given the e-commerce boost. It needs to have different marketing approach in different countries. E-commerce generally targets younger shoppers in countries.

Wal-Mart has also partnered with Hudson’s Bay which owns Lord  & Taylor. The company is also planning to introduce high-end clothing on its portal. This is in addition to the less-expensive products. However Walmart’s sole focus in the international market remains same i.e. low price in addition to improved ranges, customer service and better environments (Solomon & Polegato, 2014). In some countries it acquires existing and valuable player in order to become global player. 

Increase in Competition: The firms need to exploit new business ideas or face challenges which are the major aspect of globalization (Madsen & Walker, 2015). E-commerce procedures and Internet hold strong potential for Small and Medium Enterprises to enter and seek opportunities in the international segment. Companies like Wal-Mart and Amazon are playing over technology which can be easily copied. There can be another competitor which can come and swipe away the market share.

Even after investing a lot of money there is difficulty in generating loyalty. The customer switching cost is low in retailing. The latest technology like augmented reality should be incorporated to enhance user experience. This can however give temporary competitive advantage. The technological improvement and speed of technology has significantly increased due to globalization. The market is directed by expectation of customers. There is huge risk in investment because consumer expectations are rapidly changing and competitors are increasing. The companies are expected to have effective technology management, efficient Research and Development.

Recommendations

Already companies like Amazon already have head on-start. It is necessary it makes grand entrance. Wal-Mart needs to make strategic investment in its e-commerce expansion strategy. The company’s stock has performed very well. It is difficult to put itself at par with Amazon. There is already brand equity which Amazon has in the international market. Amazon has already become the go-to shop for everything. This is story of one competitor in global marketplace. There are more in different countries. Wal-Mart can use consumer data and apply data analytics efficiently than its competitors to understand trends in the market. The company needs to make or implement smarter assortment decisions and pricing. The company can use technology like IOT to provide personalized experiences.

Deadline

The company should utilize its cross docking warehousing system. It can also leverage its best retail network in the world. In addition to brick and mortar, the company should also be excellent on digital channels. The users in international market values in store experience. Thus it is necessary for Wal-Mart to fulfill all options and promote Omni-channel strategy (Singh, 2018). Wal-Mart needs to develop in-person innovations which can bring customer loyalty and become core competencies.

The company needs to maintain its positioning strategy across all its channels. Todays world see Wal-Mart with everyday low price. This should be aligned with its e-commerce strategy as well. The company needs to follow transnational strategy of think global and act local approach. The company needs to maintain its cost leadership approach. The company may also come up with any disruptive approach like very low pricing (Pope & Pope, 2015). This approach can help company to acquire competitor’s market share. Already company has deep pockets. So this approach can be helpful for the company in the longer run. The company’s promotional campaign should explain its products and offerings well (Turban & Turban, 2018).

Globalization promotes trade across different nations. So Wal-Mart needs to efficiently build its supply across global network which will be beneficial not only for particular country but globally (Muñoz & Stecher, 2018). For example, the customers support can be from countries like India ,Philippines etc. where human resources are skilled and comes at low cost to company. Also the company can use German Technology in order to be efficient in the e-commerce market. The company needs to perform cost benefit analysis. The main agenda of company is to increase its boundary, providing unique value to the customers and in the end become profitable.

Wal-Mart could not avoid the e-commerce for a longer time. People everywhere in the world are becoming tech savvy. They are also looking for convenience. So generation Y would do smart buying. This is the aspect which Wal-Mart needs to understand. Instead of just targeting the competitors in the market, the company should invest its resources in market research to understand the multiple aspects of different markets (Malhotra & Peterson, 2014). It is necessary that company should exploit capabilities located in the foreign markets.

Wal-Mart till now has acquired multiple companies or formed strategic alliance to lead in particular foreign market. The company understands the market dynamics very well. These moves have helped the company to create international name. But such kind of partnership brings more responsibilities. The acquisition and merger are generally failed due to different organization culture and different strategic aims of two organizations (Rothaermel, 2015). So there should be holistic approach to counter all such issues.

Conclusion

Wal-Mart has taken big risk in entering e-commerce market place. But this is a risk which must be taken. It is a global company so its ecommerce arm is also expected to expand in international market. From this report we have found different globalization factors that impact Wal-Mart ecommerce strategy. These factors are common for any other company in e-commerce sector. But there is difference in vision and mission of different companies. Wal-Mart is well established brand. Its entrance into world market would be comparatively easy as compared to new entrants.

The company has resources and capabilities to exploit. But it must have unique market plan for different countries. The company is expected to evaluate different business before acquiring them (Johnson, 2016). It needs to make sure of due diligence. Different countries have different political, social, economic, cultural, legal and technological aspects. The customers have different psychology everywhere. So Wal-Mart must not ignore even small aspects like designing or updating web sites, providing user expected offers, convenience, building trust and maintain consistency (Salminen, 2016). Apart from this, it needs to regular monitor its financial and operational performance. The company needs to build and maintain relationship with other companies and government.

References

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