Walmart and pick the right product without leaving home,

Walmart and Amazon IT Strategies

Walmart and Amazon’s Business
Models Strategies

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retail giants, both with global reach and fantastic revenues, are competing for
the same consumer influence, employing different business models and
strategies.  Walmart, a giant in
brick-and-mortar sales, with its presence in virtually every neighborhood, and
Amazon, an online goliath, reaching every corner of the world connected to the
internet.  Walmart’s business model has
been a traditional retail sales model, with a strategy to build a physical store
within reasonable distance to its consumers, and lower the prices of its goods
to the point where it does not make sense so shop elsewhere.  Amazon’s newer business model is 24-hour
presence at consumer’s fingertips, through its website, with a strategy of easy
online shopping, availability to comparison shop and pick the right product
without leaving home, while offering cheap or free and fast delivery to
consumer’s doorstep.  Though Walmart has
a fully functioning e-commerce website, it realizes that it is losing its
position as the leader in retail sales, while leaving a chunk of business on
the table for Amazon to profit from, unless it employs some of the same
business strategies as Amazon, and expands the company’s IT capability.  Since IT helped influence Amazon’s
organizational strategies, it is imperative for Walmart to understand that in
order to compete with Amazon, it also has to modify its organizational
structure and strategic planning to accommodate for the new IT influence (Laudon
& Laudon, 2016).    

The Role of
Information Technology

mission is well known: “We save people money so they can live better”
(Corporate, 2017).  This worked for
Walmart for over 5 decades and proved to be profitable and convenient for the
consumer.  With the rise of online
shopping popularity, however, sites like eBay, Yahoo! and Amazon became more
convenient for Walmart’s customers. 
Offering on-demand price and product comparison, and the ability to
purchase and receive an item without leaving their home or office, positioned
Amazon ahead of its traditional physical retail competitors through its use of
information technology. Though they have over 50 fulfillment centers, 23
sortation centers, and more than 90,000 full-time Amazon employees, it’s the
company’s web presence that solidified its success (About us, 2017).  As a matter of fact if it was not for the
internet connectivity around the globe and Amazon’s commitment to cutting-edge
IT development, the organization would not have become the online sales leader
it is today.

are two problems affecting Walmart’s ability to stay in its leadership
position.  First, Walmart’s average
customers who earn $50 thousand or less per year, are now able to use the
internet and smartphone technology to reap the benefits of online shopping.  At the same time, the stabilizing economy is
allowing them to no longer have to look for the best bargain, and instead save
their time and shop at Amazon as a more desirable option.  Second problem is that Amazon is no longer
selling just books and CDs, as it now stocks items customarily sold at Walmart.  With Amazon’s sales of $67 billion, compared
to Walmart’s only $9 billion through their online store, the latter is
concerned about the IT development impacting their sales bottom line (Laudon
& Laudon, 2016).     

There is
no question that Walmart has a significant physical presence with over 66% of
the U.S. population living within a 5 mile radius of a physical Walmart,
totaling over 4,000 stores, supported by an extensive supply chain (Laudon
& Laudon, 2016). The question is, how can Walmart harness the power of IT
to support not only these stores, but also grow their e-commerce capability,
while keeping Sam Walton’s affordability promise to consumers, and reducing the
overall cost of shipping. In order to stay competitive, the company must employ
IT-enabled organizational strategies to reduce their overhead, while hiring new
IT professionals and repurposing their established physical supply chain to
suit their new growing e-commerce capability.

Strategies Influenced by IT

organizational strategies have been influenced by Information Technology from
the beginning.  The company invests
heavily into new IT tools to stay on the forefront of technological
advancements.  In 2014 the corporation
announced a platform called Fire Phone,  designed to implement its 4-camera capability
to track a person’s face in 3D, similar to a holographic image.  Amazon’s 24-hour customer support, Mayday
allows the service agents to access their user’s screen to assist in website navigation
issues.  According to Laudon and Laudon
(2016), Amazon’s Firefly feature can identify over 100 million different items,
enabling the consumer to simply point their phone at an item, and immediately
order it from Amazon.

has increased their IT investments by funding over $300 million to acquire 5
high-tech organizations, while  hiring hundreds
of code writers and engineers.  This
enabled the company to create an application called Endless Aisle, which allows
its customer to place an instant order through a smartphone.  For the 25% of Walmart customers who do not
have credit or debit cards, this app offers an option to pay with cash (Laudon
& Laudon, 2016).    

            The Code Writers hired by Walmart implemented
a software application which enabled their merchandisers to view competitor’s
pricing in real time and lower website prices to stay competitive.  Social Media Analysts hired by Walmart gather data
to stock more trendy and upscale items to entice those consumers that
traditionally do not step foot into a physical Walmart store.  App Developers hired by Walmart have been
testing an app, capable of detecting when their customer is physically inside
one of their stores, push discount notifications straight to their smartphone
and allow them to scan items on the go, for a faster and easier checkout  process (Laudon & Laudon, 2016).    

Both organizations
realized that their company strategies have to involve IT, for Amazon it is
employing IT for more innovative ways to serve their customers, and for Walmart
it is utilizing IT to be able to penetrate the e-commerce market to stay
competitive.  Realizing that physical
store presence alone is no longer going to guarantee Walmart their leadership
position in the 21st century, yet letting Amazon do what they do
best, while penetrating online market share and maintaining their low prices,
would at least ensure that Walmart can position itself for survival for the
next decade.  And for Amazon, staying on
top of current technology ­­­­trends would ensure that other large online
competitors would always be playing catch-up to this e-commerce giant.


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