Will smaller retailers pay to use Walmart’s tech and transform their own businesses?

Discussion
Photo: Walmart
Jul 28, 2021

Walmart is officially a technology vendor — for other retailers. The company announced today that it is making available for sale some of the same tech that it has used in recent years to transform its own business.

The retailer is partnering with Adobe to integrate its Marketplace online and in-store fulfillment and pickup technology with Adobe Commerce. Walmart appears to have made the decision that it is better served monetizing its own proprietary technology since other retailers will likely find and acquire alternatives elsewhere.

“We’ve built new capabilities to serve the evolving needs of our own customers, and we have a unique opportunity to use our experience to help other businesses do the same,” said John Furner, CEO of Walmart U.S., in a statement. “Commercializing our technologies and capabilities helps us sustainably reinvest back into our customer value proposition.”

Anshu Bhardwaj, vice president of technology strategy and commercialization at Walmart Global Technology, told CNBC that a strategic decision last year by CEO Doug McMillon to expand the retailer’s focus from serving shareholders to serving stakeholders was also behind the decision.

Businesses using Walmart’s cloud-based technology will be able to offer access to information to help:

  • Provide customers with available pickup times and stores offering the service;
  • Provide customers with multiple pickup options, such as curbside and in-store;
  • Give store associates mobile tools to cut down on time picking items, handling multiple orders and managing substitutions;
  • Enhance the customer experience with order pickup communications, check-in options at the store, accurate customer arrival estimation and identification upon arrival.

Consumer-direct brands and retailers will also be able to gain access to Walmart’s online marketplace, potentially exposing them to large numbers of new customers and offering features such as two-day nationwide shipping.

“The core mission of helping people save money and live better is at the heart of every idea including Scan & Go and checkout technologies, AI-powered smart substitutions and pickup and delivery,” said Suresh Kumar, chief technology officer and chief development officer of Walmart Inc.

DISCUSSION QUESTIONS: Do you think there will be a big market among retailers and consumer-direct brands for access to Walmart’s technology via Adobe Commerce? Is this a smart move on Walmart’s part?

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"There will not be one marketplace in the future, but dozens and Walmart needs to be the key operator in one of them and present in numerous others."

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18 Comments on "Will smaller retailers pay to use Walmart’s tech and transform their own businesses?"


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Mark Ryski
BrainTrust

Walmart is taking a page out of Amazon’s playbook. Offering services to smaller retailers and direct to consumer brands is a smart move by Walmart. Not only does this enable them to financially leverage the investment they made in developing their software, but it also helps build Walmart’s marketplace.

Neil Saunders
BrainTrust

This moves shows two things. First, Walmart — and many other retailers — need to recoup their massive investments in technology and need to offset the margin-erosion from the surge of digital. Some of this will come from selling services to third parties to monetize the investments. Second, it should put an end to the fantasy that Amazon has a “monopoly” when it comes to marketplaces and routes to market for smaller retailers and brands. This was never true, but it is even more of a falsehood now that so many other routes to market — from Walmart to Kroger to Shopify — are expanding.

Jennifer Bartashus
BrainTrust

Demand for Walmart’s technology will likely hinge on how well Walmart executes its digital strategy itself. If it is market-leading, other retailers will follow, but there are already a lot of players out there offering similar services. As part of a greater strategy to build non-retail lines of revenue and profit, the move makes sense for Walmart.

Michael La Kier
BrainTrust

What better proof point exists than “this worked for Walmart” to drive adoption?!? This is a smart move that will create another, sustainable revenue stream for Walmart.

Suresh Chaganti
BrainTrust

For small sized omnichannel retailers, this could be very useful. It is as useful for larger sized retailers, but they may find it hard to justify the implementation costs if they already have a lot of these in place.

Amazon obviously sells a lot of its own proprietary techno. In fact that is one of their important revenue channels. But e-commerce platforms are largely democratized, with Shopify, Magento etc.

Walmart still has space to impact similarly in the omnichannel/physical retail. Walmart is hoping this could bring more sellers to their marketplace as well.

Chuck Ehredt
BrainTrust

This is more than a question of tactics or recouping investment. Walmart recognizes that customers are spending more time in marketplaces where many brands compete for the attention of customers. They must play there, but by sharing technology, they can capture more relevant experience and customer insight by enabling SMEs to ride on their rails.

There will not be one marketplace in the future, but dozens and Walmart needs to be the key operator in one of them and present in numerous others. However, there will also not be hundreds of marketplaces in any one country, so we will see medium and smaller retailers piggy-backing on large commercial organizations in many of them. What Walmart might consider is how to provide the on-ramp for a single retailer to be present on dozens of marketplaces. That is something Amazon is unlikely to do, but retailers really need this service.

(It is effectively what channel managers in hospitality did 10-15 years ago — and grew a huge new technology and distribution segment.)

DeAnn Campbell
BrainTrust

Walmart is positioning themselves as the Amazon alternative for shoppers who want the benefits of both online and offline shopping at scale. This helps Walmart offset the cost of their tech and grow a substantial ecosystem of products and services that further enhance customer loyalty and lifetime customer value. The retail industry is in the process of adopting this “retail as a platform” business model that will be formed by many more major retailers, shopping center conglomerates and category specific cooperatives — a platform for environmentally sustainable brands, a platform for culturally inclusive brands, a platform for high-end home goods … and so on.

Venky Ramesh
BrainTrust

Walmart is following Amazon’s lead in 1) creating a marketplace 2) monetizing data through Walmart connect and now 3) monetizing technology, but given their legacy origin it’s really admirable they are able to take a digital native like Amazon head-on.

DeAnn Campbell
BrainTrust

For all of their reputation as a low cost retailer with less than fancy stores, I’ve always been impressed by their forward take on technology. They have been experimenting with VR and AR for years, and were among the first to test BOPIS in stores with their towers and try scan and go and self checkout.

Ryan Mathews
BrainTrust

It will depend on several things. First, will the benefits of these systems scale down to smaller operators, or do they require scale to pay out? Next, will other retailers be comfortable using these tools or — in this age of conspiracies — will they back away worrying about Walmart installing “Trojan Horses” into their businesses? Third, what’s it going to cost versus the return? And, finally, some retailers may worry that Walmart is giving them antiquated tools and retaining the “good systems” for themselves. All those caveats firmly in place, it still seems like a good move on Walmart’s part if for no other reason than it creates a new, and potentially highly lucrative, revenue stream.

DeAnn Campbell
BrainTrust

I like your comment about Walmart possibly keeping the good stuff for themselves. Unlike Amazon, Walmart is in direct omnichannel competition with anyone who shares their platform.

Jeff Sward
BrainTrust

I don’t see this as shifting focus from serving shareholders to serving stakeholders. Serving stakeholders IS serving shareholders. This is just plain smart stuff, both strategically and financially. If Amazon is a digital mall, then it looks like Walmart is grabbing some of that action also. If they can digitally enable other smaller retailers faster and more economically than they could do it themselves, they it sounds like a win on all sorts of levels. Including providing Amazon with some additional competition.

Joel Rubinson
BrainTrust

Purchase-based information is absolutely the best way to target advertising for maximum ROAS. My work has proved that those with a 20-80% probability of choosing a given brand are five times more responsive to advertising for that brand vs. other category buyers. Amazon has purchase and also upstream shopping data that they leveraged into being #3 in ad revenues after Google and FB. So Walmart has possibly an even better graph than Amazon so getting into AdTech (50% margins too) is a big deal. Broadening the application through other retailers is brilliant. It is also possibly that those retailers are passing data back as part of the deal. Brilliant stuff although late … but better late than never.

Doug Garnett
BrainTrust

This is a smart move by Walmart and there will be customers for it. How well will it pay out for those retailer clients? That’s not clear. The challenge with many of the technology gizmos is that they do not work alone — but only in connection with execution in the store, at DCs, and at WHQ. Can smaller retailers commit those resources in order to make this work? We will have to wait to see.

Shep Hyken
BrainTrust

This is a great opportunity for smaller retailers to buy technology that would otherwise be very expensive — and even cost-prohibitive. Amazon has done some of this with their technology, so why not others? This creates competition, which is good for everyone.

Camille P. Schuster, PhD.
BrainTrust

Retailers need to try Walmart’s services to see how well they will fit the needs of their customers before adopting them. That is a practice that should be used for all services. While the service may work well for one retailer it is important to understand how the software will interface with your company systems and your customers first.

Rachelle King
BrainTrust

Consumers love to hate Walmart. Retailers and other merchants both envy and admire them. People are going to poke at this no matter what. Still, it’s not likely the major retailers will get in line behind Walmart (pride is still a thing). However, for smaller players that can maximize a turn-key solution to transform their business and customer experience, this could be the holy grail; a peek inside the playbook of all playbooks. With that, the potential to showcase Walmart as making all retail boats rise, not just their own. Mostly, this is a win-win for Walmart under a carefully calculated hedge that retailers who chose this path stand little chance of threatening Walmart’s leadership position.

Kenneth Leung
BrainTrust

It could be useful as alternative to Amazon for online commerce, especially if Walmart limits access to the retailers data with Adobe Commerce being the middleman. Amazon is both a retailer and a technology vendor and Walmart could pivot in the same way in the long run.

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Braintrust
"There will not be one marketplace in the future, but dozens and Walmart needs to be the key operator in one of them and present in numerous others."

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