Ecommerce in the Global Business Environment

This report explores the case of Walmart and its ecommerce business, focusing on key aspects such as strategies, value propositions, revenue model, and target markets. It also provides an industry analysis of the online retail industry and discusses the opportunities and threats in the market.

Ecommerce in the global
business environment

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Contents
INTRODUCTION.................................................................................................................................1
Walmart in E-commerce........................................................................................................................1
Key aspects of Walmart’s ecommerce strategy.....................................................................................1
Industry analysis....................................................................................................................................3
Industry Analysis...................................................................................................................................4
Porters five force...............................................................................................................................4
SWOT analysis..................................................................................................................................5
Issues related to ecommerce aspects of business...................................................................................7
Recommendation...................................................................................................................................7
REFERENCES......................................................................................................................................8

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INTRODUCTION
In the time when digital mediums have to billions of hands, it has become essential for the
firms to take the routes of e-commerce. It is seen that companies such as Walmart which was
known for its Brick and Mortar kind of business has added online platforms through which
they are doing their business. Walmart Inc. is a multinational retail company from America
that has large numbers of supermarkets, grocery stores and discount department stores
(Walmart, 2019). Due to adoption of digital business, new market strategies, revenue models,
business models, value prepositions have to be applied so as to target their market segment.
This can be done by analysing the environment for business. This report will highlight the
case of Walmart while concentrating on the different aspects of their e-commerce business. It
also provides the industry analysis in terms of environment.
Walmart in E-commerce
This American based company is highly successful in the retail business. It is operating with
more than 11,348 stores which are operational in more than 27 nations under the 55 different
brand names. This company is world’s largest company in terms of revenue with more than
US$500 billion and it has more than 2.3 million employees. This company has come into the
e-commerce business in the year 2007 by launching its website Walmart.com (Matusitz and
Reyers, 2010). This was a site to store service that enabled consumers to do purchase by
online mediums and picking up merchandises in stores. In very few years of time, this
company has been able to make huge amounts of profits from its business. With the help of
business processes such as Walmart Pay and addition of online retailers such as Jet.com, this
company’s online market has boosted up incredibly. With so many online acquisitions in
different parts Walmart is now able to sale high amount of their products through this
medium at the worldwide level. Best example in this regards is purchase of Flipkart which
has made it an valuable player in the Indian market.
Key aspects of Walmart’s ecommerce strategy
In ecommerce business, there are different kinds of strategies and approaches being used by
the company. Some of the features of Walmart’s e-commerce are:

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Strategy/ Approach: Walmart is committed towards providing the best experience to its
customers. For this, they have adopted different set of strategies. This company is acquiring
digital brands that are resonating with the shoppers of younger age. For reaching to new
customers in new destinations, this company has hired local retailer companies. Some of the
famous digital brand that has been acquired by Flipkart is Jet, Shoebuy, Bonobos, Bare
Necessities, Moosejaw, Eloquii etc. As a part of their ecommerce strategy, this company has
reinvented its apparel offering. Celebrity Brands & Private Labels is another strategy used by
them where they have did partnership with celebrities such as Ellen DeGeneres and Elizabeth
Stewart (Chuang, et al. 2011). They have improved their supply chain management so that
products are available in the near most warehouses. This has become essential for improving
the speed with which they deliver their products.
Value propositions: Walmart’s value proposition is defined through its innovative thinking.
They have a commitment to save the money of their consumers; they have planned their
services in such as a manner that they have become leader in the way they do their business.
Their ecommerce value is being supported by supply chain management where they ensure
timely delivery of the products. With the advancement in the online technologies, this value
proposition has gone to higher levels (Stankevičiūtė, Grunda and Bartkus, 2012).
Revenue model: Currently this company is generating 3% of its total revenue from their e-
commerce platform. There primary source of sales is their brick and mortar business but in
the years to come, this value is going to increase considerably. Most of their sales are done by
their website Walmart.com while sales are also made through Apps and third party sites such
as Jet.com, Flipkart and many other sites that they have acquired (Rogers and Makonnen,
2014).
Target markets: Target market of this company is very huge. They sell all the type of
commodities for every segment in the society. Since they offer products at relatively lower
prices hence they can target people from all the classes of the society from any occupation.
They have targeted people between the age group of 14-65 years as they are doing different
types of purchase. People who seek cost advantage or are cost conscious are highly targeted
by the company (Bonanno and Goetz, 2012).
Business model: Walmart’s business model is highly advanced. They have large numbers of
customer segments and they have their segments on the basis of different kinds of variables.
Multiple demographics are their segments. Value proposition is provided by its competitive

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pricing, multiple sales network, accessibility, flexibility as well as its domestic and
international reach. There are several digital channels that they utilise for doing the sales.
Customer relationship has been their priority for which they are using their digital mediums
effectively (Etail, 2018). Their key activities selling of retail products. At the same time their
key partners include suppliers and sourcing partners, marketing and affiliate partners, channel
and joint partners, strategic and alliance partners. Their key resources include intellectual
property, mobile platforms, advanced technologies, their partners and personals. It also
includes their trademarks and patents. Their cost structure suggests that their cost remains on
the lower side. Its revenue stream includes products from different categories i.e. grocery,
health and wellness, Entertainment, Hardlines, Apparel and home products.
Ecommerce marketing strategies: There are different types of ecommerce marketing
strategies that are being used by Walmart. These strategies include content marketing, social
media marketing, website optimisation techniques, search engine optimisation, app based
marketing, pay-per-click marketing. In this search engine optimisation and App based
services are the two major strategies being used by the company (Zhang, et al. 2010).
Industry analysis
Online retail industry has grown widely and it has become essential for the organisations to
ensure that they are competitive in the market (Laudon and Traver, 2013). Most of the
companies are taking online mediums so as to do maximum sales. In 2017, the worldwide
sale through online mediums was around 2.3 trillion dollars which is expected to reach to
4.88 trillion US dollars in 2021.
The growth of the industry is projected to remain high. Alone the data from China suggests
that 19% of their retail sales are done through online mediums and mainly through mobile
devices. In the broader context it is seen that almost all the company irrespective of the
industry is selling their products through e-commerce market (Watson, 2011). In future which
the increase in the speed and bandwith of the online technologies, it is expected that large
numbers of people are going to get connected with these technology. It increases the scope of
the Walmart to do better ecommerce business.
Walmart has wide range and numbers of stakeholders attached with it. Their stakeholder’s
group include investors, Customers, Employees and Suppliers. Investors and customers have
been their priority. This is because this company is aiming to become the leader in the e-

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commerce market also which is not possible without doing lots of acquisitions (Cheng,
2018). In their strategies, role of investors is very high and hence they are paying attention to
their benefits. Strategies are made checking the benefits that stakeholders want to achieve.
They also have different kind of benefit programs for employees which help them in
achieving higher employee satisfaction. They also give supplier free hand hence it helps the
firm in maintaining the supply and demand balance. For Walmart it is crucial to manage the
support from suppliers. This is because it helps them in enhancing the pace of their business
operations.
Industry Analysis
It is essential for any organisation to do industry analysis as it enables the firms to do analyse
the way in which they need to transform their business process so as to achieve success.
Industry analysis suggests about the trends in the market at the same it tells about the
opportunities and threats present in the market. In the industry analysis porters analysis can
be analysed.
Porters five force
 Threats of substitution: There are large numbers of ways available with the customers
to make purchase. There are several substitute services available with the customers
and hence their threat remains on the higher side (Michelson, et al. 2018). Only in
ecommerce market there are different types of technologies available and these are
capable of increasing the sales in the market. In future more substitute products are
going to come in the market hence this threat remains on the higher side.
 Threat of competition: There are large numbers of competitors that are becoming
serious challenge to the business of Walmart. There are businesses like Amazon
which has become a first priority of the people. This has forced the company to invest
huge amount money in the ecommerce market. Competition has also increased
because of the fact that every company has adopted online mediums to sell their
products. This has increased the threat to alarming levels. In the future whole battle is
going to be on the online mediums (Thomas, 2018).
 Threat of new entrant: Highly advanced technologies are available with the firms and
these technologies are helpful for the new firms to come into the market. With the
innovative ecommerce model, it has become easier for the companies to come into the
industry. Even the SME are coming to the ecommerce market and are able to reach to

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larger numbers of people and the scope of these big companies to increase its sales
decreases. This threat is bigger in the local markets where larger numbers of options
are available with consumers (Mohapatra, 2013).
 Bargaining power of suppliers: There are large numbers of suppliers in the market
both bigger and smaller. Today even the small suppliers are able to sell to high quality
products. These products are available at lower prices hence companies like Walmart
are able to sell products at lower cost. This is the major reason why Walmart maintain
a healthy relation with their suppliers. This increasing numbers of suppliers in the
market has reduced the bargaining power of suppliers to the lowest of levels. In many
countries, these suppliers are selling products with least profits (Brown and Dant,
2014).
 Bargaining power of customers: There are large numbers of companies in the retail
ecommerce market. These companies are capable of changing the trends in the
market. It is also seen that these companies are providing products at highly lower
prices. This increases the bargaining power of customers. In ecommerce there is a
choice with people to easily switch from one company to another and check the
prices. The decision making becomes very smart as people can compare the products
and the value at just one site (Wang and Ren, 2012). With the increasing speed and
reach of internet facilities, it has become easier for the organisations to have value to
their products and services that can give them competitive advantage over the rivals.
These kinds of facilities have increased the bargaining power of customers to reach to
highest of values. In the future the amount of competition that is projected is higher
hence this bargaining power is going to get further higher.
SWOT analysis
It is also crucial that company understands its internal and external environment so as to
understand their capabilities to deal with the challenges they are facing.
Strengths
 They have huge amount of money that they can invest in their ecommerce design
which will help them in improving the position in the market.
 They have a huge brand name in the market which makes their expansion plans
easier.

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 They have large numbers of suppliers attached with them and hence they are able to
provide products at lower cost.
 Highly efficient supply chain has made it possible for the Walmart to deliver the
online ordered products at much faster rate. This supply chain is available to them at
the global levels.
 Their technology infrastructure is highly advancement and with the use of
technologies such as data management software and artificial intelligence they will be
easily able to capture the larger part of the market share. For this they will have to use
the information they have collected in so many years (Nudelman, 2011).
 Lots of acquisitions have been done by the company in the last few years and will
enable the company to make sure that they have larger market share to capture.
Weakness
 Due to lower prices, the profit margins have reduced to much lower levels and hence
their revenue has not grown to higher levels.
 It is not having a business model that not imitable. Anybody with huge resources will
be able to copy this business model.
 There are better ecommerce sellers in market like Amazon and Alibaba as well as
many other ecommerce retails in different parts of the way. This gives them
competitive advantage over the rivals (Curty and Zhang, 2013).
Opportunities
 This company has huge opportunities in the developing nations especially in the
Asian region (Tsai, Raghu and Shao, 2013).
 They need to have opportunities the quality standards.
 They need to improve their resources like human resource and technology to improve
their competitiveness.
Threats
 It is facing threats for aggressive competition in the market.
 Online customers have lower loyalty when compared to other form of business (Peters
and Zelewski, 2013).

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Issues related to ecommerce aspects of business
Some of the issues that can be identified are:
 Technological advancements are too fast and matching this technological pace
requires huge capital investments. This can reduce the cash crunch available with the
firm.
 There is use of artificial intelligence by competitors which gives them competitive
advantage to the rivals.
 Decreasing customer loyalty due to increased choices available with the consumers is
an issue for the company especially when they have to ensure their position in the
market and reach to newer markets. Retaining customers can be a serious challenge
for Walmart (Cheng, 2018).
 Ensuring profitable long term growth can be a challenge in this industry.
 Choosing the best technologies and partners can be a difficult so as to achieve
maximum sales (Bonanno and Goetz, 2012).
 Finding the right product to sale at the same time finding perfect customers might be
difficult. Even one wrong customer review can take many customers from the
company. This is difficult as generating targeted traffic can be a tough job for new
retailers in the ecommerce market.
 The business model for any company is easily imitable. This is a threat to the
companies as any new player in the market might be able to take over the market
(Thomas, 2018).
Recommendation
On the basis of the issues that has been analysed in the above part of the report, it is
recommended that Walmart need to invest a huge amount of money in the technological
advancements at regular basis. Company must focus on the technologies such as artificial
intelligence that is seriously backed by data they have collected in over the years. It is also
recommended that this company do aggressive online marketing so as to increase their brand
presence in the ecommerce market (Michelson, et al. 2018). In order to ensure customer
loyalty company must provide some kind of discounts and loyalty cards. Walmart needs to
make quick adjustments in the supply chain so that they can be ready for the increasing
ecommerce demands.

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