Walmart and Jet.com: The future of clicks and mortar
On Aug. 8, Walmart announced it would buy Jet.com -- one of the fastest growing e-commerce companies in the U.S. -- for a whopping $3 billion.
The purchase is the latest in Walmart’s attempt to better compete with e-commerce powerhouse Amazon, whose $107 billion in sales dwarfs Walmart’s $13.7 billion in online sales for 2015. This year alone, Walmart rolled out Shipping Pass, a subscription service to compete with Prime at half the cost, and offered a week-long free shipping promotion in the run up to Amazon’s Prime Day in July.
The acquisition is a smart move for Walmart for several reasons. Where the company’s “Everyday Low Prices” approach has made them a master at brick-and-mortar sales, it traditionally struggled to grow its e-commerce business. Now, with the Jet acquisition, the company is set to make a much stronger e-commerce play.
The purchase also puts experienced e-commerce vet and Jet CEO Mark Lore -- who successfully built Diapers.com and sold it to Amazon before starting Jet -- at the helm of Walmart’s online division. Where online has also been a secondary market for the retailer, Mark will give Walmart an “e-commerce first” perspective, with a proven track record of building and scaling (quite quickly) massive online operations.
What’s more, the Jet acquisition gives Walmart some street cred. Where the company has traditionally failed to appeal to younger, tech-savvy consumers, bringing Jet on board now gives them direct access to that demographic. Will they have to fight to keep those customers? Of course. But retaining the Jet customer base will likely prove easier than acquiring those customers net-new. And then there’s the data.
In addition to getting access to Jet’s pricing algorithm, Walmart now owns the company’s warehouse and customer data. Combined with the company’s existing data -- and the mobile payment data they’ll now be gathering as they roll out their new Walmart Pay capabilities -- the company is now equipped with deep data insights to inform their long-term e-commerce strategy.
While on the surface, it appears to be a one-on-one battle of the giants, Walmart’s recent moves offer solid proof of how changing customer expectations are driving the future of the industry -- and all retailers should take note.
Bricks and clicks
From curbside pickup of online orders to in-store returns of online purchases, today’s consumers expect a seamless omnichannel experience. While the last several years have largely been focused on physical retailers’ move to e-commerce, we’re now seeing online retailers like Bonobos and Amazon opening brick-and-mortar locations as they recognize the importance of delivering an in-person brand experience. This shift is critical -- but it’s testing the traditional boundaries and structure of retail organizations.
For many retailers, the online and in-store teams are still siloed, often competing against each other for high revenues and low return rates. But for long-term success, organizations will need to unify their channel teams, setting company goals that have them working together to achieve long-term success.
Speed
Long gone are the days when customers were satisfied with waiting 10 days, even two weeks to receive their newly purchased products. Today’s consumers want near-instant gratification, and expect everything about their shopping experience to be fast and easy -- from the initial product search to the purchase process to the final product pickup or delivery.
Walmart’s roll out of the Walmart Pay feature on its mobile app -- which also gives shoppers access to promotions and helps them locate products in stores -- is the latest example of retailers turning to mobile to add a layer of convenience to the shopping experience.
We’ll continue to see retailers use mobile and its location-based capabilities in innovative ways to engage with consumers and capture valuable data to inform marketing strategies. Beyond price and product selection, Walmart’s unveiling of two-day delivery subscriptions shows delivery times can now be make or break for retailers. In fact, recent data from Dropoff highlighted the direct connection between delivery times and cart abandonment, showing that 60% of consumers have decided not to purchase from a retailer due to slow delivery speed.
It’s all about the data
The deciding factor in a brand’s’ ability to succeed in today’s evolving retail environment will ultimately be their ability to effectively collect and use data. As retailers like Walmart look to bolster their omnichannel capabilities -- through acquisitions or in-house efforts -- smart integration of data sources will be key to successful execution.
Bringing all existing data sources into one unified view of the business -- from in-store and online transaction history to preferred delivery times and mobile app usage -- will give retailers more comprehensive customer profiles allowing for better targeting, engagement and conversion.
But while new channels allow for a higher volume of data collection, only the retailers who effectively turn that information into action will survive. Data tools created for retailers like store relationship management software now give brands the ability to provide organization-wide access to data, tie it to action plans, and measure progress against shared goals, helping them shift from simply chasing data to driving insights that yield real results.
Walmart is making significant strides in its attempt to bolster the brand and deliver on changing consumer expectations. The upcoming holiday season will really put these latest moves and the company’s evolving brand strategy to the test -- now, it’s all about execution.
Chris Taylor is the founder and CEO of Square Root, an Austin-based SaaS company whose store relationship management (SRM) platform, CoEfficient, helps retail and automotive enterprises turn data into action to align their organizations, increase transparency, encourage collaboration and improve store performance.