Walmart occupies retail space in Las Vegas, Nevada, around June 2019.
John Furner, President and CEO of Walmart WMT -0.7% in the United States, made this comment during a live interview at NRF 2023 at the beginning of January: “Loyalty in retail is the lack of something better.”
Which is precisely why the new alliance between Walmart and Salesforce has a lot going for it in many different ways.
A recent article on CNBC says that the agreement is meant to help Walmart market and sell its patented technology to other businesses.
The change is intended “to speed up sales of its (Walmart’s) GoLocal delivery service, which drops off products at customers’ doors, and Store Assist, which helps staff more quickly and precisely choose and pack orders for curbside pickup and delivery.”
Is this a play that was taken directly from Amazon’s AMZN (-1.2%) playbook?
100%.
But even that isn’t the end of the story here either.
Although the move is very Amazon-like, most merchants are still reluctant to implement it for fear of losing customers.Target TGT -1.7 percent, Walmart’s closest competitor, gave some hints that it might be pursuing a similar strategy when it purchased Shipt in 2017, but it hasn’t launched anything in the same spirit since.
Macy’s?
Same deal.
Up until this moment, Macy’s has made absolutely no mention of offering its technology for sale to other businesses operating in the garment market.
In fact, one would be hard pressed to find another example of any store taking as overt an approach as Walmart or Amazon does with regard to this matter. Kroger is the only possible exception to this rule, and even that could be pushing it.
This decision by Walmart makes good business sense since it provides Walmart with an additional source of money to supplement its existing operations.
If it can sell more of its technology to other companies, it will see an increase in its overall earnings.
However, the story doesn’t stop getting better from there since, to paraphrase what Furner mentioned earlier, the move is also an excellent way for Walmart to “eat what it cooks,” so to speak. If you go back to what he said above, that is.
Therefore, it shouldn’t come as much of a surprise to learn that the first two capabilities that Walmart aims to offer to others are its GoLocal fulfilment service and its Store Assist platform.
The first option helps other businesses handle last-mile deliveries by using Walmart’s size in logistics, while the second option assists other shops in prioritising and optimising all of the processes around in-store order selection and packaging.
Both of these issues also happen to be two of the most significant challenges that retailers are currently confronted with: the first is figuring out how to reduce the costs associated with e-commerce deliveries, and the second is figuring out how to make in-store employees happier and more productive despite widespread staffing shortages in the retail industry and the ever-shifting dynamics of their day-to-day jobs.
Because of one key distinction, Walmart is the only major retailer that fully comprehends the nature of these challenges.
Scale.
In order for the technology that was born in a shop to operate at scale, it must be able to scale not just inside that retailer but also across other retailers.
Walmart has demonstrated that the first element is true, but it has not yet shown that it can effectively present the second half.
The brilliant aspect of the move, therefore, is that Walmart will learn, by putting its own technology on the market, which of its offerings are actually of high quality and which of them are merely the product of Walmart designing and groaning its way through the process of attempting to accommodate its own internal retailing procedures. This will be an extremely beneficial realisation.
To put it another way, Walmart will figure out which of its own technological systems are a waste of money and which of them are not.
The above statement is not at all pithy, despite the fact that some people may find it humorous.
Amazon is a behemoth in the retail industry, and Walmart is fighting an uphill struggle against it. Amazon is one of the few companies that fully comprehends how to use technology to enhance the fundamental architecture of how shopping is conducted.
Amazon, which poses the company’s greatest competitive threat, is adept at developing processes that put the needs of the consumer first and encourage repeat business from those customers.
Walmart is essentially putting a stopgap measure in place by making its technology available for others to use. This will help the company understand, in the face of criticism from the outside, where it is most likely meeting the long-term needs of its customers, as well as where it may be falling short of the mark.
Regarding the evaluation of Walmart’s own technology capabilities, the retailer has only had access to its own internal perspective up to this point.
It is of the utmost importance that a store carefully consider how it will incorporate various forms of technology into the layout of its overall offerings.
It is no longer sufficient to simply stock shelves with excellent items that are offered at the lowest possible cost.
E-commerce has levelled the playing field and placed a premium on how simple and convenient it is for a merchant to put items in the hands of customers whenever and however the customers want those goods to be delivered.
Pay attention to what John Furner means when he says, “Loyalty in retail is the absence of something better,” because what he is really saying is that people are only as loyal as their options, and the partnership between Walmart and Salesforce may in fact be exactly what the doctor ordered when it comes to keeping the spark alive in the bedroom between Walmart and its customers for the long term.
The move is amazing for this reason and for no other reason at all.
