Just as Amazon Web Services is the profit centre that fuels most of Amazon’s other businesses, Walmart CEO Doug McMillon is increasingly interested in expanding its profit pools beyond its core retail business.
Starting Wednesday, small and medium-sized retailers can purchase technology developed by Walmart to allow shoppers to buy items online and pick up their purchases in-store. These businesses will also be able to add products to Walmart’s online marketplace with a few clicks. To offer a suite of cloud-based services, Walmart has partnered with Adobe, which will sell the software via a subscription.
Walmart has seen its sales skyrocket both online and in-store as the pandemic has taken hold. While some other retailers were forced to close stores to help contain the spread of Covid-19, Walmart was seen as a critical retailer and remained open. Some customers, seeking to limit the amount of time they spend in stores, took advantage of Walmart’s online shopping and in-store pickup options. These developments accelerated the company’s e-commerce growth. The retailer’s online sales jumped 79% in the year ended Jan. 29, with pickup and delivery sales up triple digits from the previous year.
A significant opportunity remains. Last December, Adobe and market researcher IDC estimated the total addressable market for content and commerce-as-a-service software to be about $44 billion.
Wallmart strategy exposed?
For those who ask why Walmart would want to help its potential rivals succeed, Bhardwaj said those small businesses would be served regardless.
“Digitization is happening everywhere as the consumer evolves,” Bhardwaj said. “There’s no choice but to evolve with them.”
Walmart’s size and scale and its proximity to 90 per cent of the U.S. population within 10 miles of one of its stores give it a substantial advantage. In addition, Bhardwaj said, “We want to serve better our communities, our shareholders, our stakeholders and the community.”
She noted that about a year and a half ago, McMillon changed the language in a slide it uses in presentations from “serving our shareholders” to “serving our stakeholders.” Bhardwaj said it was a meeting with McMillon that spurred his idea to sell Walmart’s technology to other retailers.
Bhardwaj has been involved in other key technology initiatives at Walmart. Most notably, she led the successful Scan & Go technology at Sam’s Club, allowing customers to call in their purchases with a smartphone when adding items to their cart.
A new software venture
The new software venture opens up a potential revenue stream for Walmart and fits with its strategy of building new businesses that serve new customers and allows profits to flow back into the company to fund innovations.
Neither Walmart nor Adobe publicly share their expectations of how ample a business opportunity this could be, but Bhardwaj said, “I’m betting my life on it,” as his current role at the retailer was created to make his idea a reality.
For Adobe, the Walmart partnership increases its visibility.
“We can now offer a more holistic solution, a best-in-class omnichannel experience,” said Peter Sheldon, senior director of business strategy at Adobe, in an interview. “From Adobe, [these businesses] will benefit from Walmart’s best-in-class e-commerce experiences and best-in-class omnichannel experiences.”
Small and medium-sized retailers will use Adobe to power e-commerce sites, including shopping cart functionality, search, navigation and product recommendation capabilities. (Walmart does not use Adobe’s commerce software for these functions for its Web site. It has its technology).
Small and medium-sized businesses and retailers with at least $1 billion in annual sales already use a variety of Adobe’s e-commerce products, including Rite Aid, Verizon, Unilever, Coca-Cola, HP, Honeywell, Trader Joe’s, and more.
Walmart provides the technology that powers employee picking and packing of online purchases and the geolocation technology employees need to know when customers arrive to pick up orders.