COVID-19 exposes flaws in online retail; automation to gain traction
The expert explained why the pandemic was a “double whammy” for online retail operations as lockdowns began, moving on to the challenges and opportunities for Walmart as the company deepens its online footprint.
Walmart’s online segment accounted for approximately 8% of the overall sales in 2019. Bolstered by the effects of COVID-19, “I would expect that to be closer to maybe 13% or slightly higher this year”, the expert said. While just a few percentage points, this difference equates to over USD 10bn in revenue, he emphasised. “Over the next five years, I seriously see e-commerce growing dramatically.”
The Interview also discussed Walmart’s recent decision to discontinue Jet.com, as well as the imminent launch of Walmart Plus and its partnership with Shopify. “It’s not to say that Walmart didn’t get anything from the [Jet.com] acquisition,” the specialist said. Among other learnings, the company gained insight into how to run e-commerce facilities. Meanwhile, Walmart Plus might pique the interest of shoppers who are “mindlessly attached to Amazon because they feel that they have paid their Prime membership and they get free shipping.”
Expanding on the topic of back-end automation, this is an area that has huge potential but many companies are still crawling while attempting the transition to walking when it comes in this domain. Few are “anywhere close to running yet”.
As Walmart ramps up its online capabilities, management will have to balance the fact that the company is a retail business provider, a blue-chip stock as well as an e-commerce player. The expert also talked about how the technological prowess of Walmart’s distribution or fulfilment centres compare with those of Amazon.
In terms of whether Walmart could reduce shipping costs, the specialist believes there are “plenty of opportunities” as the company is “very well-positioned from a cash standpoint”.
To access all the human insights in Third Bridge Forum’s Walmart – online business outlook, click here to view the full transcript.
The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.
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