Walmart Archives - Electric Thoughts in a Digital Era

Q4 – What Is Next?

Over the last two weeks, I have been seeing signals that make me concerned about the next twelve months. As someone who has looked at patterns for a large part of my career, these signals individually can be seen as news, but combined, they highlight a challenging year ahead. What happens in Q4 and in 2025?

What am I seeing? I am seeing customer spending patterns change worldwide and large incumbents laying off staff. These incumbents are large-cap companies that rarely do layoffs, which tells me companies see a problematic financial time ahead. Yes, in most cases, these companies overhired but laying off 1000 or more people is about cost savings or shuttering businesses. Is this an early sign of the artificial intelligence impacting employment? I think not.

Source: Cheezburger

Walmart Sells Its Entire JD.com Stake – Implications

Over the past week, I have been thinking about Walmart selling its entire JD.com stake unexpectedly. The implications of this decision have not been described adequately, nor have the future impact been discussed. What are the consequences for both Walmart and JD.com?

This story started in 2011 when Walmart made an undisclosed minority investment in Yihaodian. In 2015, Walmart acquired the remaining shares in the e-commerce platform Yihaodian for an undisclosed amount. It is important to note that in June 2015, the Chinese government started allowing total foreign ownership of some e-commerce businesses. This decision was to encourage foreign investment and competition in the e-commerce sector. In 2016, Walmart sold Yihaodian to JD.com and acquired 5% of JD.com stock at a valuation of $1.5B. The company also started a strategic partnership with JD.com.

The strategic partnership included:

JD.com will acquire the Yihaodian marketplace platform assets, including the brand, website, and app. At the same time, Walmart will continue to operate the Yihaodian direct sales business and sell products in the marketplace.
Sam’s Club China plans to open a flagship store on JD.com, expanding its high-quality imported products availability in China, offering same- and next-day delivery through JD.com’s nationwide warehousing network.
Walmart and JD.com are partnering to enhance product selection across China by leveraging their supply chains and expanding the range of imported products.
Walmart will be listed as a preferred retailer on JD.com‘s O2O JV Dada, boosting online traffic and allowing customers to order fresh food and items for 2-hour home delivery while maintaining its physical stores.

Source: Walmart

A Review On Walmart’s Ecommerce Efforts Post Jet.com Acquisition

I have purposefully not commented on Walmart’s ecommerce efforts after the retail giant acquired Jet.com. There were many immediate reactions to the acquisition but the simple truth is that no-one had any idea how it would end up. Let me be clear – the acquisition is a long term bet by Walmart on Marc Lore and his team to grow their ecommerce efforts. This is also a reflective post in which I am trying to be as objective as possible.

The day Walmart & Jet.com shocked the entire ecommerce industry

On 8 August 2016 Walmart shocked the ecommerce industry by announcing their acquisition of Jet.com for $3.3 billion. $300 million will be paid via Walmart stock. The acquisition ensured that early Jet.com investors made large returns on their bet but no-one expected Walmart to be the ultimate end game for Jet.com as the company rapidly gained size via heavy spending on advertising, low pricing and buzz.

The initial thinking was that Jet.com was acquired due to the business taking market share away from Sam’s club. Jet.com used bulk sales and technology to provide customers with low pricing. It is important to note that while Jet.com was a startup Marc Lore ensured that he never mentioned Jet.com as an Amazon competitor but rather it was described as online version of bulk retail operations seen at Sam’s Club and Costco. I also need to mention that once Jet.com launched publicly it initially was going to use a membership fee to subsidize the low pricing it would provide to consumers. In a space of 6 months Jet.com moved away from the membership fee as customers were not willing to pay another subscription to a retailer (I believe that this was aimed at Amazon Prime but Lore under estimated the impact that Prime has on customers.)

I strongly believe that until the day of the Walmart acquisition, Jet.com did not have a business model that was sustainable nor clearly defined their future.

@WalmartLabs – The big retailer moves into digital

Walmart is the biggest retailer in the world and arguable the most controversial. Labor disputes and being in the news not for financial results seems to happen fairly often.

Wal-Mart Stores, Inc., (NYSE: WMT) serves customers and members more than 200 million times per week at more than 9,600 retail units under 69 different banners in 28 countries. With fiscal year 2011 sales of $419 billion, Walmart employs more than two million associates worldwide. Walmart continues to be a leader in sustainability, corporate philanthropy and employment opportunity.