Walmart may be the world’s largest company but in the e-commerce zone, it is the third largest, behind Amazon and Apple. In fact, Amazon’s e-commerce sales ($94.67 billion) are seven times as large as Walmart’s ($14.43 billion)!
It’s not that Walmart woke up to the e-commerce phenomenon later in the game. The company has been online since the early days of the internet. Yet, despite all its financial depth and managerial strength, it allowed a newcomer to upstage it. How did this happen and why?
Vision is fundamental
Any successful business starts with a vision; it is no different in the online world. The power of digital is potentially disruptive, and so, whether a business is new or is integrating ‘online’ into its overall workings, the key to harnessing this power is having a clear vision. Without this focus, the foray into digital will be a tepid venture.
People often assume that Amazon started its business to sell books at a lower price than brick-and-mortar bookshops did. This is far from the truth. Amazon’s vision is to be ‘...earth’s most customer-centric company, where customers can find and discover anything they want to buy online... at the lowest prices.’
This vision, according to folklore, led Jeff Bezos to zero in on books as a starting point because even the largest bookshop could only hold a few thousand titles. An online store, on the other hand, could potentially hold all the titles published in the world. The company’s development, then and subsequently, has been driven by this focus of enabling consumers find anything they want to buy online.
Perspective
Walmart, in contrast, saw e-commerce, at best, as an add-on to its brick-and-mortar empire. Consequently, its focus was on creating an online presence, modelled along the lines of its physical stores. Also, as was the view during the early days of the internet, Walmart may have perceived that embracing the web would hurt its brick-and-mortar infrastructure.
Following from this, the company’s e-commerce offering failed on many fronts, making it an ‘also ran’ in the online space.
Embrace or perish
It could be argued that it is easier for a start-up to have a digital vision since it does not have the baggage of analogue investments. In and of itself, this proposition seems valid. However, if companies with significant analogue assets do not embrace the digital frontier and plan for it, their businesses are fated to become extinct.
This is already happening across the world, including in India, where those who are late to change, in industries such as stock broking and travel services, are forced to close shutters.
The digital paradigm of interaction and aggregation throws up opportunities that were hitherto lacking. Just look at the whole new range of services — ride-sharing, food delivery, fitness tracking and online education, to name a few — that empower individuals in ways that were inconceivable just 15-20 years back. The rapid proliferation of Uber and Ola is leading many car hire companies to shut shop; and, anecdotal evidence abounds of footfalls dropping precipitously in certain kinds of retail stores.
While the emergence of digital technologies has added new phrases to the economic lexicon, such as micro-entrepreneurship and gig economy, it has opened new frontiers. These, however, are not just for the newcomers.
‘Go West Young Man, Go West’
Thus did Horace Greeley exhort the adventurous young men of the US to seek fame and fortune. In today’s digital world, however, the West can be where one is, with a little bit of imagination and a lot of planning.
The most important element in unlocking the digital puzzle is determining what one wants to achieve. Catching up with the Joneses or it being a hygiene requirement is not one of them! Given its vast diversity, the online world has the potential to add to one’s profitability, and improve business processes that impact the health of the enterprise.
Here are some examples.
Government departments promoting rural artisans are restricted by Government-run emporia. Most such efforts limit the market for handicrafts and fail to adequately promote and grow the artisans’ skill base.
Going online would expand the market reach of such output to a global audience, enable newer opportunities, recognise artisans and promote traditional skills. The possibilities are limitless — and have the ability to overwhelm.
That is why it becomes important to define the purpose of going online, and what one hopes to achieve by it.
Going back to the handicrafts example, the market for such goods can be positioned in multiple ways — as substitutes for household articles, as objects of art, as interesting gift ideas, or all of these.
Specific approaches
The actions to be taken for each of these approaches will be different.
If one wanted to promote the products as substitutes for household articles on the brick-and-mortar side, the product strategy would need to be aligned to that. On the digital side, the marketing would need to create the web resources — website, search strategy, e-commerce and marketing to compete with products that consumers normally use.
Typically, handicrafts are promoted for their artistic expertise and cultural heritage. Thus, such products are placed in contexts that highlight these features. But such depiction, even if unintended, could restrict the adoption of handicrafts into mainstream usage.
Therefore, these should be depicted in everyday contexts. So, when aiming to generate sales online, the search optimisation target should be relative to other products that consumers use for the same purpose.
As can be seen, a blind headlong rush to the internet will not yield satisfactory results. Outcomes linked to a digital vision will provide the scale of satisfaction that the disruptive ability of the internet offers.
Why digital?
Given all the work that goes behind entering the online world, one might wonder, ‘Why go digital at all? After all, Walmart still is five times the size of Amazon’.
Theodore Levitt, an economist and professor at Harvard Business School, observed in his landmark article, The Marketing Myopia , ‘There is no such thing as a growth industry… companies organised and operated to create and capitalise on growth opportunities’. Quite obviously, if consumers are migrating to the internet to sate their consumption needs, it behoves the business to be in that channel.
Besides, internet affords the possibility of achieving scale at a relatively low cost. In the handicrafts example, while it may be impossible for an entity to create a global physical market, because of the prohibitive costs, the internet makes it possible for the emporium to dream big because reaching out to the world is now affordable.