Sam 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.
Bryan Eisenberg is a keynote speaker and the coauthor of the Wall Street Journal, Amazon, BusinessWeek, and New York Times bestselling books "Call to Action," "Waiting For Your Cat to Bark?," and "Always Be Testing." Bryan was been recognized by eConsultancy members as one of the top 10 User Experience Gurus, he was selected as one of the inaugural iMedia Top 25 Marketers, and a DMEF Rising Star Award winner in 2010. He is also cofounder and chairman emeritus of the Web Analytics Association now the Digital Analytics Association. Bryan serves as an advisory board member of SES Conference & Expo, the eMetrics Marketing Optimization Summit, and several venture capital backed companies. He works with his coauthor and brother Jeffrey Eisenberg. You can find them at BryanEisenberg.com.
Their first step in improving the customer experience is to improve the employee experience. The reason customers are disappointed is because they are being served by sad people.
I doubt that Wal-mart cares much about customer experience in their stores so why would they care more about the e-commerce experience? There are more challenges than their culture to deal with including:
1) A growing trend toward avoiding corporate stores and shopping locally and buying from small businesses.
2) Many consumers went into debt trying to maintain their standard of living while inflation drove up prices and employers chose not to pay more. Their credit is tapped out and even if it isn’t, more of their income is going to pay interest.
3) Add to that the unemployed and underemployed and you can’t expect people to spend like they once did.
While some claim we’re in a recovery, that doesn’t ring true for most Americans. If there is a recovery of better jobs, there is no guarantee that those people are likely to shop at Wal-mart.
Wal-mart’s bad reputation has cost them a lot of business and will continue to do so.