Assignment on E-Commerce Systems

E-commerce systems
Walmart’s Ecommerce International Expansion
Student’s name
Name of the Institute

E-commerce systems
Section 1: Research Question and Methodology
Problem Statement
How does globalization influence the e-commerce growth of Wal-Mart.
Wal-Mart Inc. is multinational retail corporation based out of America. The company has chain
of grocery stores, discount department stores and hypermarkets. Sam Walton founded the
company in 1962. Wal-Mart has 11000+ stores and 50+ clubs in 28 countries. The company
operates with different names in different countries. For example, Wal-Mart is the name in
United States and Canada, in United Kingdom its name is Asda (now sold to competitor), Best
Price in India, Seiyu Group in Japan, Wal-Mart de México y Centroamérica in Central America
and Mexico and wholly owned operations in Canada, Brazil, Chile and Argentina. Wal-Mart is
famous for its “Every Day Low Price” strategy. The company does this by maintaining lean
supply chain strategy (Christopher, 2016).
The forces of globalization have significant impact on e-commerce. These forces have
helped the retail giant as well as create issues. Globalization increases the scope of e-commerce.
The efficiency, market impacts and coordination are the major forces of globalization (Beck,
2018). The growing telecom and transport links in different world countries is attracting retailers
to access new market through e-commerce. Customer’s changing lifestyle also supports
company’s requirements to enter into e-commerce space (Andam, 2014). Wal-Mart is strong in
terms of offline retailing. But when it comes to e-retailing, Amazon is big time player. The
retailing companies now a days looks at both online and offline aspect of retailing. They look
forward to brick and click approach. So Amazon started opening its offline stores like Amazon

E-commerce systems
Go (Amazon, 2015). Moreover, Wal-Mart started following different strategy to enter into e-
commerce. The companies have significant presence in US market. The other competitors of
Wal-Mart include Target and Sears. But Wal-Mart is far ahead in terms of offline retailing.
Coming over internet retailing, Wal-Mart wants to leverage every opportunity in National and
International Market. Wal-Mart has acquired multiple e-commerce company like Jet.com,
MosseJow to compete with Amazon.com. Also these partnerships brought out large number of
brands in Walmart’s kitty. So Wal-Mart is also acquiring stakes in e-commerce website of India:
Flipkart. This shows that company wants to diversify its e-commerce arm in multiple countries.
Research Methodology
Globalization opens the path for companies to enter into world market. It is not additional
but must to enter into global arena (Hirst & Bromley, 2015). The report explains how
globalization is positively and negative impacting Walmart’s ecommerce. The later section of
report discusses different approaches which Wal-Mart can follow to have sustainable
competitive advantage in global space. The report analyzes and critically evaluates current e-
business strategy of Wal-Mart.

E-commerce systems
Section 2: Research or Management Report
Globalization Factors Affecting E-commerce
There are multiple factors which can explain how Globalization is impacting E-commerce of
Wal-Mart.
Positive Impacts
Expanded Market: The scope of market has increased due to globalization. Wal-Mart will
evaluate different e-commerce markets before entering. So it gives Wal-Mart opportunity beyond
domestic market. For example, India is huge market that is growing rapidly. India has more than
50 million shoppers in the year 2016 which forms around 14% of full population. However,
India has strict policies which say that overseas retail player cannot sell directly to consumer.
There is exception in wholesale cash and carry segment. E-commerce segment allows the retailer
to make 100% Foreign Direct Investment. So this is plus point for Wal-Mart. Different countries
have different Foreign Direct Investment or retail for multi-brand or single brand retail; this has
made Wal-Mart to change its strategies multiple times. The laws and regulations are more
flexible now. This has led Wal-Mart to expand e-commerce across multiple countries. However,
certain market entries are avoided. For example, the European Market is less attractive for Wal-
Mart because of certain characteristics. The retail industry in Europe is mature. So for a new
entrant it is difficult to take market share from existing players. This is difficult task for Wal-
Mart. The competitors create entering barriers for new players (Hahn & Youn, 2018). Wal- Mart
models are significantly copied in Europe by other players so it would not give competitive edge
to the company. If there is some new offering then Wal-Mart can think of tapping E-commerce

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European market. Globalization also helps in building local distributor relationship, provide free
flow of labor and country’s resources are utilized in efficient way (Baylis & Owens, 2017).
Significant Growth Aspects: E-commerce global approach is necessary for its survival and
significant growth is possible only in international arena. The United States Market is already
saturated and its population is very less as compared to many other countries. So it is necessary
for Wal-Mart to not limit its expansion till domestic market. The emerging markets have huge
platforms for growth. The disposable income is increasing in some markets. Internet penetration
is improved. There are lower trade barriers, increasing homogenization in culture, and expansion
of IT (Terzi, 2016). Globalization is providing opportunity in order to meet the competition.
Exchange of technology: The Company would feature different technologies of acquired
companies. For example, from Jet.com it will use “smart cat” technology. This technology
allows users to pay less if they pack multiple items in one box or opt out of returns or pay
through debit card. Investment in new technology and new brands will provide more options to
customers and help company to achieve its goals. Also, Wal-Mart has seen many existing players
in the different markets. So the attributes of competitors can be easily replicated by Wal-Mart.
For example, According to Coreright Research Amazon offers cheap delivery and this is one of
the reason shoppers visits its website. This attribute can be easily imitated by Wal-Mart. The
company wants to be faster, digital and reshape the portfolio of business for future.
Leveraging resources and competencies: Globalization allows Wal-Mart to use resources and
competencies in order to enter global market. The companies generally follow logically
sequenced approach to enter into different markets. This will help them to gain learning from the
initial market entries and apply it to other. The company needs to understand its distinctive

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capabilities before entering into world markets. The main agenda is to leverage physical and
digital assets. It will improve productivity. Wal-Mart will exploit two main resources which were
originally developed in the U.S. (Greenspan, 2015). One is, it can utilize its huge buying power
with giant domestic suppliers like Revlon, Proctor & Gamble, Pfizer, Coke, Nestlé, Hallmark,
3M and Kellogg to procure goods or products from its non-domestic stores cost effectively. It
could leverage its competencies and knowledge bases like merchandising skills, effective
management and efficient use of technology, I.T. deployment and logistics to benefit its
international strategy (Fernie & Sparks, 2014). A positive but unforeseen byproduct of Wal-Mart
e-commerce strategy is to utilize cost-reduction or sales-generating ideas in the international
market to improve its bottom line.
Negative Impacts:
Investment Prospects: The international expansion will require high investment prospects in the
country. Although Wal-Mart’s pockets are deep but still it needs to find attractive market for
expansion. The investment only makes sense if it could bring profits. For example, e-commerce
in India runs at loss for many years due to heavy discounting. This delays the return on
investment. This is done for better and stronger business in future.
Different Business Models: Wal-Mart is very famous for offline retailing. There is big difference
in online and offline retailing. The company has different business model for different market in
offline retailing. For example in China the company is majorly located on highways. In e-
commerce, its acquisition of Jet.com has already given the e-commerce boost. It needs to have
different marketing approach in different countries. E-commerce generally targets younger
shoppers in countries. Wal-Mart has also partnered with Hudson’s Bay which owns Lord &

E-commerce systems
Taylor. The company is also planning to introduce high-end clothing on its portal. This is in
addition to the less-expensive products. However Walmart’s sole focus in the international
market remains same i.e. low price in addition to improved ranges, customer service and better
environments (Solomon & Polegato, 2014). In some countries it acquires existing and valuable
player in order to become global player.
Increase in Competition: The firms need to exploit new business ideas or face challenges which
are the major aspect of globalization (Madsen & Walker, 2015). E-commerce procedures and
Internet hold strong potential for Small and Medium Enterprises to enter and seek opportunities
in the international segment. Companies like Wal-Mart and Amazon are playing over technology
which can be easily copied. There can be another competitor which can come and swipe away
the market share. Even after investing a lot of money there is difficulty in generating loyalty. The
customer switching cost is low in retailing. The latest technology like augmented reality should
be incorporated to enhance user experience. This can however give temporary competitive
advantage. The technological improvement and speed of technology has significantly increased
due to globalization. The market is directed by expectation of customers. There is huge risk in
investment because consumer expectations are rapidly changing and competitors are increasing.
The companies are expected to have effective technology management, efficient Research and
Development.
Recommendations
Already companies like Amazon already have head on-start. It is necessary it makes grand
entrance. Wal-Mart needs to make strategic investment in its e-commerce expansion strategy.
The company’s stock has performed very well. It is difficult to put itself at par with Amazon.

E-commerce systems
There is already brand equity which Amazon has in the international market. Amazon has
already become the go-to shop for everything. This is story of one competitor in global
marketplace. There are more in different countries. Wal-Mart can use consumer data and apply
data analytics efficiently than its competitors to understand trends in the market. The company
needs to make or implement smarter assortment decisions and pricing. The company can use
technology like IOT to provide personalized experiences.
The company should utilize its cross docking warehousing system. It can also leverage its best
retail network in the world. In addition to brick and mortar, the company should also be excellent
on digital channels. The users in international market values in store experience. Thus it is
necessary for Wal-Mart to fulfill all options and promote Omni-channel strategy (Singh, 2018).
Wal-Mart needs to develop in-person innovations which can bring customer loyalty and become
core competencies.
The company needs to maintain its positioning strategy across all its channels. Todays world see
Wal-Mart with everyday low price. This should be aligned with its e-commerce strategy as well.
The company needs to follow transnational strategy of think global and act local approach. The
company needs to maintain its cost leadership approach. The company may also come up with
any disruptive approach like very low pricing (Pope & Pope, 2015). This approach can help
company to acquire competitor’s market share. Already company has deep pockets. So this
approach can be helpful for the company in the longer run. The company’s promotional
campaign should explain its products and offerings well (Turban & Turban, 2018).
Globalization promotes trade across different nations. So Wal-Mart needs to efficiently build its
supply across global network which will be beneficial not only for particular country but globally

E-commerce systems
(Muñoz & Stecher, 2018). For example, the customers support can be from countries like
India ,Philippines etc. where human resources are skilled and comes at low cost to company.
Also the company can use German Technology in order to be efficient in the e-commerce
market. The company needs to perform cost benefit analysis. The main agenda of company is to
increase its boundary, providing unique value to the customers and in the end become profitable.
Wal-Mart could not avoid the e-commerce for a longer time. People everywhere in the world are
becoming tech savvy. They are also looking for convenience. So generation Y would do smart
buying. This is the aspect which Wal-Mart needs to understand. Instead of just targeting the
competitors in the market, the company should invest its resources in market research to
understand the multiple aspects of different markets (Malhotra & Peterson, 2014). It is necessary
that company should exploit capabilities located in the foreign markets.
Wal-Mart till now has acquired multiple companies or formed strategic alliance to lead in
particular foreign market. The company understands the market dynamics very well. These
moves have helped the company to create international name. But such kind of partnership
brings more responsibilities. The acquisition and merger are generally failed due to different
organization culture and different strategic aims of two organizations (Rothaermel, 2015). So
there should be holistic approach to counter all such issues.
Conclusion
Wal-Mart has taken big risk in entering e-commerce market place. But this is a risk which must
be taken. It is a global company so its ecommerce arm is also expected to expand in international
market. From this report we have found different globalization factors that impact Wal-Mart
ecommerce strategy. These factors are common for any other company in e-commerce sector.

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But there is difference in vision and mission of different companies. Wal-Mart is well
established brand. Its entrance into world market would be comparatively easy as compared to
new entrants. The company has resources and capabilities to exploit. But it must have unique
market plan for different countries. The company is expected to evaluate different business
before acquiring them (Johnson, 2016). It needs to make sure of due diligence. Different
countries have different political, social, economic, cultural, legal and technological aspects. The
customers have different psychology everywhere. So Wal-Mart must not ignore even small
aspects like designing or updating web sites, providing user expected offers, convenience,
building trust and maintain consistency (Salminen, 2016). Apart from this, it needs to regular
monitor its financial and operational performance. The company needs to build and maintain
relationship with other companies and government.

E-commerce systems
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