---
title: "Is Walmart in a Hurry to Transform into E-commerce? Actually, It Hasn't Figured It Out Yet!!"
description: "At the beginning of this year, Buffett's sale of all Walmart stocks shocked the global retail industry. This may mark the end of the pure offline retail era represented by Walmart. Walmart knows that if it doesn't make progress online in 2017, its stock price could drop significantly. However, despite its efforts, Walmart still has no clear strategy for transformation."
author: "戏哥"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2017-04-21"
language: "en"
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# Is Walmart in a Hurry to Transform into E-commerce? Actually, It Hasn't Figured It Out Yet!!

> At the beginning of this year, Buffett's sale of all Walmart stocks shocked the global retail industry. This may mark the end of the pure offline retail era represented by Walmart. Walmart knows that if it doesn't make progress online in 2017, its stock price could drop significantly. However, despite its efforts, Walmart still has no clear strategy for transformation.

Preface:
At the beginning of this year, the news that Buffett sold all his Walmart stocks shook the global retail industry. I think that years later, when we look back at this event, we may find that it could be a sign of the end of an old era, that is, the end of the pure offline retail era represented by Walmart.
Walmart is well aware that under the influence of Buffett's sell-off, if it cannot achieve certain online results in 2017 and try to transform from offline to online, its stock price is likely to drop significantly. I do not deny that Walmart is one of the few physical enterprises in the United States that is truly striving to transform. In recent years, it has done a lot for this, and its anxiety about transformation is evident. Unfortunately, this cannot hide the fact that it still has no clue about transformation so far.
**01**
**A Small Incident Reveals the Problem**
Recently, Walmart launched a discount activity in the United States called "Pickup Discount": if consumers order on Walmart's website and then pick up the goods at Walmart's physical stores, they will receive varying degrees of discounts.
Regarding this discount activity, some retail industry insiders believe that Walmart's move is good, and it's a great idea to drive traffic from online to offline. My view is just the opposite: this shows that although Walmart has been selling goods online since 1999 and now has e-commerce websites in 11 countries, it still does not truly understand consumers in the online shopping era, nor does it know how to handle the relationship between its e-commerce and physical stores, and internally, Walmart still has an unclear understanding of the company's development direction.
Why do I say that?
As the retail industry insiders mentioned earlier believe, Walmart's main purpose in doing this is to make consumers buy other goods from the store when they pick up their orders, thereby increasing sales. On the other hand, Walmart can also save shipping costs.
At a glance, it's clear that this is Walmart's idea completely from its own perspective. How would consumers view this activity? For the discount, I have to spend hours driving to the supermarket to pick up goods, spending time and gas. Is it really worth it? Consumers will quickly find that it's not worth it at all and then give up participating.
What's worse, when consumers want to calculate whether it's worth it, they will find it's not easy to calculate. Because there are 10,000 SKUs participating in the activity, and each SKU has a different discount. For example, a $148.05 car seat has a 5% discount ($7.40), and a $1,698 70-inch TV has a 2.9% discount ($50). Consumers have to add them up one by one.
However, there are exceptions. Those with low time cost and in need of the discount, i.e., those with lower income, will participate and go to pick up goods by bus or other low-cost transportation. But such consumers have limited purchasing power and clear goals. Even if they go to Walmart's physical stores, they won't do much additional shopping. This means that Walmart's activity will undoubtedly fail to achieve the goal of increasing sales for its physical stores.
Walmart also forgot a very important thing: today's American consumers are no longer the ones who lived in small towns and drove to the supermarket once a week a decade ago. They have been spoiled by Amazon and have become lazy. They are used to paying money for convenient ordering, delivery, and fulfillment, rather than spending their time and energy for discounts.
From this incident, can you see where Walmart's problem lies? It completely fails to understand how to balance the position of its e-commerce and physical stores at this stage and how to leverage their roles to rescue itself from the chaotic transformation vortex.
**02**
**This Is a Game Between the Physical and E-commerce Forces Within Walmart**
Based on Walmart's recent series of actions, I think Walmart's "mental journey" should be like this: seeing the shrinking sales of physical stores, it is eager to compete with Amazon for e-commerce market share, but it is unwilling to give up the physical store business that it has painstakingly built over decades. So it tries to establish a suitable online-offline combination model, ultimately achieving online-to-offline traffic diversion, using online to save offline stores, and achieving prosperity in both online and offline.
To quickly gain a place in the U.S. e-commerce circle, Walmart has acquired several e-commerce companies in recent years. In August last year, it acquired Jet.com for $3 billion. Subsequently, Jet acquired online shoe and apparel retailer ShoeBuy for about $70 million at the end of December. In February this year, Walmart acquired outdoor clothing and goods online retailer Moosejaw for $51 million. But after the acquisitions, Walmart did not integrate these e-commerce companies into its own blood; instead, it let them operate independently. At least the e-commerce sales proportion on the financial statements will look better soon.
Walmart also wants to learn how to do e-commerce and complete transformation through acquisitions.
Walmart made Jet.com founder Marc Lore also the head of Jet.com and Walmart's e-commerce team. Lore subsequently reorganized the e-commerce team and, in February, made the first adjustment to Walmart's physical store and online store procurement operations, making the online procurement team independent from the offline team. In the future, products sold in Walmart's physical stores will also be approved for online sales. This way, Walmart's strong headquarters procurement can transfer products from its 4,600 U.S. physical stores online, expanding the variety of online products.
On the surface, Lore's "reform" has made landmark progress, but for a company where 97% of business is physical, and severely lacking e-commerce genes, promoting e-commerce still faces great resistance. Even after the procurement team reform, the existing team's operational efficiency may not adapt to the requirements of e-commerce operations. According to a large consumer goods supplier for Walmart: "So far, Walmart's way of operating is extremely inefficient for both us and them. For example, they buy 5 million items for physical stores and 5 million items for online stores each year, but we have to deal with different buyers for this, which is indeed troublesome." Walmart's procurement team in San Bruno, California, still handles suppliers that only supply Walmart's e-commerce. These suppliers cannot bypass the San Bruno procurement team's procedures.
Some believe that Lore's reform may not last.
In fact, before Lore, Walmart had already hired Neil Ashe to do similar reforms, but the results were unsatisfactory. The problem is not how Lore should reform or who should reform. A game between physical and e-commerce forces is happening inside Walmart. Whether it should truly make concessions for e-commerce and what concessions it can make, Walmart has not yet figured out. At least for now, Walmart's determination is not so firm; it thinks more about using online to divert traffic to offline. This is like taking a step forward into the online shopping era, but Walmart keeps looking back, reluctant to leave the physical store era, wanting consumers to continue walking into physical stores.
But consumers have changed. As we analyzed above, it is impossible for Walmart to pull them back from online to physical stores. Isn't it time for Walmart to wake up?
If it wakes up, at least it can start doing a few things: "teach" Walmart's physical store customers and other consumers to shop on Walmart's website instead of Amazon or other sites; physical stores can still exist, but those big-box stores are destined to be eliminated. Keep categories suitable for offline, such as fresh food, and operate them in suitable formats.
**Source: 调戏电商 (ID: tiaoxiEC)**
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