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Wal-Mart: The Imperative of Click and Mortar
Competitiveness
Edgardo
Donovan
OPM 500
Dr. Gregory
Duane Herbert
Module 5 –
Case Analysis
Monday, September 26, 2006
Wal-Mart: The
Imperative of Click and Mortar Competitiveness
"In
August 2002, Wal-Mart, the world's biggest retailer, told its suppliers they
would have to start sending and receiving electronic data over the Internet.
Today, more than 98% of Wal-Mart's EDI exchanges with suppliers are done over
the Internet using AS2, a software package from Isoft Corp., Dallas, that
suppliers must purchase and install if they wish to continue selling to the
chain.." (Zimmerman)
Whereas
during the 1990’s pure play ecommerce
operations were seen as a new force that would drive business away from
traditional “brick and mortar” companies today the “click and mortar” model has
become the de facto reality for all companies competing in the retail and
business to business sectors. Today it would sound silly to think of a major
retail player like Wal-Mart to exist without an online channel given that would
be tantamount to a quasi insurmountable handicap in the race to build
relationships with customers while winning ever increasing shares of their
acquisition dollars.
Although
there will never be an equal substitute for face to face relationships inside a
retail environment an online web presence provides a company with an alternate
channel to reach the customer when they not at a store. With the advances in
database technology coupled with the ubiquitous nature of web technology it is
now easier to build customer relationship management systems that track and
interact with customer shopping within an online retail store. Furthermore,
there is a potential synergistic relationship between the online and brick and
mortar components of their business given that the online component can act as
a catalyst an reminder for a customer to go to an actual Wal-Mart store to touch
and feel products they have researched off of the online store.
"You
need to aggressively invest resources, consistency, and time to leverage the
web as an effective marketing tool." (Donovan)
Wal-Mart
has masterfully built an online retail component to their business that
seamlessly integrates with their dated existing retail inventory management
system. They can ensure availability of products by either shipping them
directly to customers or by transferring them among different retail stores.
The online component also enables them to track product searches and
click-through rates giving them an extra window into consumer shopping
behavior. In essence, they have achieved the technological sophistication of an
aggressive high cash burn rate startup
competitor while maintaining the financial solvency of a seasoned frugal
industry leader.
"The
acquisition, maintenance, and delivery of inventory can be more efficiently
managed with the use of on-line resources so that customers aren’t promised
goods that aren’t in the inventory." (Yee)
With
patience, consistency, and attention to detail the online retail component of
Wal-Mart will enable them to build customer profiles that may recommend
products and services based on past purchase habits similarly to the way
Amazon.com does it on their web site. This type of operation will require a
deeper level of integration between the legacy driven inventory system and
online store.
"In
October 2002, Wal-Mart told Mr. Beachler that he had about six weeks to get his
AS2 infrastructure up and running. In anticipation that other retailers would
follow Wal-Mart's lead, he chose a system that cost about $22,000 -- and in the
six months that he has been using it with Wal-Mart, he says, it has almost paid
for itself, reducing long-distance fees between $1,000 and $5,000 a month.."
(Zimmerman)
Walmart.com operates the standard set of
traditional ecommerce features off of its web site. It is organized within a
middle-tier catalog engine interconnected to an extensive product database
which in turn integrates with elements of the back end legacy inventory
management system. The web site benefits from plugs on all official Wal-Mart
advertising initiatives but also adopts viral marketing techniques to include
referral incentives as well as outright affiliate programs.
Wal-Mart
follows an acceptable system of navigation and follows a web site flow design
that resonates well according to human factors issues. While navigation refers
to the structure of the site, links are the mechanism by which users move from
one place to another. Successful link structures can help users navigate the
site more effectively. A well-designed site comes down to understanding the
user and taking into consideration usability issues. Sites that do not pay
attention to these standards risk being less successful. It is essential to
provide users with an indication of the location of the page they are on
relative to the structure of the web site. Bad user interfaces can contribute
to human error, possibly resulting in personal and financial damages.
Whereas
during the 1990’s pure play ecommerce
operations were seen as a new force that would drive business away from
traditional “brick and mortar” companies today the “click and mortar” model has
become the de facto reality for all companies competing in the retail and
business to business sectors. Today it would sound silly to think of a major
retail player like Wal-Mart to exist without an online channel given that would
be tantamount to a quasi insurmountable handicap in the race to build
relationships with customers while winning ever increasing shares of their
acquisition dollars.
I. Works Cited
Zimmerman,
Ann.
To Sell
Goods To Wal-Mart, Get on the Net. Internet 2.0 2004
Donovan,
Edgardo. Full
Life-Cycle Web Presence Management. EddieDonovan.com, 2000.
Wollan,
Melody.
E-commerce
Operations Management.
II. Works Consulted
Zimmerman,
Ann.
To Sell
Goods To Wal-Mart, Get on the Net. Internet 2.0 2004
Donovan,
Edgardo. Full
Life-Cycle Web Presence Management. EddieDonovan.com, 2000.
Wollan,
Melody.
E-commerce
Operations Management.
Drickhammer,
David.
Manufacturers
Like Us. Industry Week 2004
Nist.gov. What is Acceptance Sampling? Engineering
Statistics Handbook, 2006.
Gentry,
Connie. Million
Dollar Savings. Chain Store Age 2005
Quinn,
William. Easing
the Load On the Road. NJBIZ, 2004.
Berner,
Robert.
Is Kohl’s
Becoming Unbuttoned? Business Week, 2004
McClenahen,
John..
Bearing
Necesessities. Industry Week 2004
Yogesh,
Malhotra. Knowledge
Management for [E-]Business Performance. Kmbook.com, 2005.
Bremner,
Brian. Edmondson, Gail.
Wollan,
Melody.
Introduction
to Operations Management. Wiley, 2002
Iacocca,
Lee.
Iacocca – An
Autobiography. Bantam Books 1984
Pretzer, Stephanie. Using Technology to Buy Time. Currency
Doubleday, 1963.
Ansoff,
Igor.
Corporate
Strategy. McGraw Hill, 1963
Alfred, Alfred. My Years with General Motors. Currency
Doubleday, 1963.
Jackson, Tim. Inside Intel. 1997.