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Wal-Mart’s Problem Isn’t Just E-commerce

tunnel-vision-1500x1000Sam Walton said “You can make a lot of mistakes and still recover if you run an efficient operation. Or you can be brilliant and still go out of business if you’re too inefficient.” Price, selection, and convenience were good enough to destroy their competitors. Wal-Mart focused on logistics and SKUs, not individual customers.

Sam Walton changed the retail landscape of his time. He expressed a clear narrative about operational excellence and efficiency. Wal-Mart would always offer customers a larger in-stock selection at the best prices. It was the right solution to the challenges he faced. It isn’t now.

Wal-Mart jumps on the e-commerce Jet

According to recent data from eMarketer, Walmart is the second largest U.S. online retailer.  While that is about $13 billion in sales last year,  it is well below Amazon’s $82.8 billion. Walmart’s digital growth lags behind the economy-wide rate of 15.1% in the first quarter.  E-commerce accounts for about 3% of Walmart sales.  Compare that to approximately 8% of all retail sales.

Wal-Mart‘s uber-expensive acquihire of Jet.com should improve their e-commerce team. Especially since Marc Lore (Jet.com’s founder) will now be president and chief executive of e-commerce at Walmart.

Wal-Mart misdiagnoses the challenge

Brick and mortar stores everywhere are closing. Many blame it on Amazon and other e-commerce players. The sad truth is that the small percentage of digital sales aren’t the problem. What ails retailers is the lackluster efforts to enhance the customer experience . The connected buyer journey is evolving. Customers expect to buy things where they want it. They expect to buy things how they want it and when they want it. They expect to engage with the brand irrespective of the channel and/ or device. And most of all they expect to have a great experience all along the way. And you can’t do that without stitching it all together with digital.

Wal-Mart, retailers in general, need a cultural change. 

Digital is not just a series of new shiny objects, cost cutting tools or new media ads. Digital should be the glue that connects every part of the organization with customers. Digital should allow every part of the organization to analyze data, learn from it, and act on it. They must put the customer, NOT the SKU, at the center of their universe.

Wal-Mart needs to focus the whole organization on the entire customer experience. They need to improve the interactions customers have at every touchpoint. Then they need to convey that change in narrative to everyone from the boardroom to the stockroom.

Improving e-commerce is relatively easy. Cultural change is hard. Marc Lore may do wonders for Wal-Mart’s ecommerce channel. What he won’t do is transform Wal-Mart’s retail culture. Wal-Mart still doesn’t think it has anything but an e-commerce problem.

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