Published on: February 26, 2018by Kevin Coupe
There were a couple of Walmart-related stories over the weekend that struck me as Eye-Openers.
First, CNBC had an interview with Ralph Schlosstein, CEO of Evercore Partners, in which he says that “Walmart should have created Amazon. No reason in the world they didn't, except that no board or no CEO would take 15 years of investment that was dilutive of earnings to build that huge terminal value.”
That speaks to the past. And a problem that, quite frankly, could be ascribed to a number of retailers that let the wolf (Amazon) into the house.
One of the things we talk about a lot here on MNB is how companies and senior executives are rewarded based on short-term thinking and actions; this quarter’s sales and profits tend to be far more important than positioning a company for long-term future success. That is one of the things that Walmart had to deal with last week, when it revealed that it had a fourth quarter e-commerce sales that were not up to expectations, leading some to speculate about the validity of the strategy and how long the company’s e-commerce chief, Marc Lore, would continue in the job.
My position remains consistent on this. I think Walmart is doing what it has to do, and that means enduring a period of time when e-commerce sales and profits will be inconsistent, but part of a critical broader effort to lay a digital foundation that will serve the company for decades. That means making mistakes and enduring some disappointments and even failures; the critical factor is learning from all of them, always moving forward.
VentureBeat, in a piece about Walmart, talks about a current problem. It suggests that “it’s never been just about e-commerce versus retail. It’s always been about flipping the script — starting with the customer as opposed to the product sale, and wrapping both your e-commerce and your retail channels around that customer experience.” And VentureBeat argues that even now, with all its e-commerce investment, isn’t doing that.
“Walmart is still essentially a product company,” the story says. “It has decades of institutional experience with supply chains, transport logistics, and inventory management. It knows how to buy and sell products. That worked fine for a long time. It doesn’t anymore.
“In the old product model. You built a product, put it into as many channels as possible, and hoped there were customers waiting at the end of those channels. In the new service-based model. You start with the customer, understand their wants and needs, and then wrap your service around that customer via relevant channels. No more pushing units to strangers.”
The story goes on: “Walmart is a product company that still views its e-commerce efforts as a distinct channel, a separate line of business. That’s not too surprising, considering the vast majority of its e-commerce business has been bought, not built: Jet.Com, Bonobos, ShoeBuy.Com, Moosejaw.Com, etc.”
But the continuing challenge for Walmart - and, quite frankly, every retailer trying to tack e-commerce onto existing operations - is creating a customer-focused, long-term-oriented culture that be relevant to shoppers even while challenging traditional benchmarks and ways of doing business.
That’s an Eye-Opener.
- KC's View: