Wal-Mart- E-commerce - Coursework Example

Wal-Mart- E-commerce Introduction: Wal-Mart Founded in the 1960’s under the able leadership of its founder Sam Walton, Wal-Mart has sustained its growth and presence in even the toughest of times since then (Hayden & Lee et al., 2002). This has been possible through its strategic plans and the management’s dedication towards making it the number 1 retailer in the world. Dedicated towards enabling customers to save and shop conveniently through its everyday low prices strategy, Wal-Mart operates thousands of stores in the US and has expanded internationally as well. Initially, it offered the best prices under one roof for convenience, but as market dynamics changed, Wal-Mart improvised as well. Now with the use of technology it has developed an e-commerce network that enables customers to shop online through the web or through their smart devices. This e-commerce network also enables Wal-Mart to manage its logistics and supply chain better. Out of the 11,000 retail outlets it operates in 27 countries, Wal-Mart has established a successful e-commerce facility in 10 of these countries. Its strong focus on efficient service, customer convenience and affordability has made it successful in its business growth and sustainability. E-business Model: As the worlds largest, fastest-growing and most dynamic ecommerce organization’s the system operations for Wal-Mart’s electronic business is located at Californias Silicon Valley with operations in Bangalore, India and Brazil – Wal-Mart’s e-commerce leads all online and mobile innovation for the store. Wal-Mart has the best data scientists and the largest collection of commerce data in the world for e-shopping with a traffic of 45 million visits a month, growing every year. With their mobile apps and shipping options like  Home Free, Site to Store,  Pick up Today, Ship from Store and Same Day Delivery, they connect the experience between online and U.S. stores. These factors make it one of the leading e-shopping website in the world (Corporate.walmart.com, 2014). Supply chain management and customer satisfaction are two very important aspects that Wal-Mart has focused on. Through technology it has managed to set up systems that not only enable them to track and sustain their supply chain process, but they also use it to track logistics, manage customer database etc. the customers are given the opportunity to go online and shop at their convenience at any time of the day-or night. The use of technology enabled Wal-Mart to cut down its costs and o about the business more efficiently. EDI is Electronic Data interchange that enables swift and prompt exchange of documents and proposals between two network ends (Benjamin & De Long et al., 1990). Wal-Mart made effective use of these systems to positively impact the following: Procurement: the system enabled Wal-Mart to connect to their suppliers on a continuous basis. The suppliers can access the sales information for every store and replenish the goods accordingly. Purchase order can be downloaded easily and goods can be dispatched on an immediate basis, Logistics: Any retail outlet will strive to have a strong logistics structure because of is imperative that the goods are distributed on time and delivery is prompt. In this way, dedicated drivers get computerized instructions about which supply dock to approach and which store/outlet to supply the goods to. A technique of ‘cross-docking’ enables a technologically prompted delivery to the exact store/customer the goods have to be supplied to. This cuts down the existence of an intermediary and saves cost. Inventory: significant use of technology and communication means enable Wal-Mart to track sales and inventory levels at every store. Since it is spread over a large area, it is important that unnecessary distance is not covered for inventory replenishment. Wal-Mart has its own satellite communication system that was installed in 1983. Inventory tracking also allowed Wal-Mart to analyze which goods are demanded the most and the seasonality of particular sales. In this way, it is able to place orders with the suppliers beforehand, reducing the risk of diminishing inventory at the time of sales surge. POS system allowed the salesperson to generate receipts easily through a pre-fed code of every product and this was linked directly to the inventory system. VOF- Voice Based Order filling: VOF is a system that connects personnel at the Wal-Mart stores with the distribution centers. The person who picks up the order has an electronically enabled microphone to confirm the specifications of the items that needed to be picked up. These cuts down the chances of mis-picking that can lead to extra and costly repeated visits to the distribution centers. Quick replenishment: since the Wal-Mart stores are spread over a larger area or floors, movement of goods within the outlet is also major function. Use of IT enables the exact tracking of goods and their location so that time is not wanted in looking around in order to find a particular. In 1991, a retail link system was established that enables daily processing of sale transaction of each store around the clock and inventory level indicators, at the cost of 4 Billion. Connecting this link system with EDI, Wal-Mart enabled suppliers to view information of each store of their particular products and make supply arrangement accordingly. Massively Parallel Processor (MPP) was a system used to monitor the movement and stocking of goods. All transaction and distribution details were collectively recorded in a centralized database through the satellite communications systems. Needless to say, within no time, Wal-Mart got a reputation of having the most efficient and sophisticated electronic system in the retail market. With time, newer technology enabled more advanced features in the system. For example collaborative planning, forecasting and replenishment (CPFR) system. This system along with all the functions of EDI and MPP had another feature of demand forecasting (Wisner & Leong et al., 2005). This fast became a business practice and supply chain tool to enable businesses in efficient resource allocation and product supply. Furthermore, web-enabled EDI helped Wal-Mart in cutting down the license fee that private VAN required. It saved them millions of dollars and provided a more secure means of interaction between supplier and Wal-Mart management. RIFD technology also helps cut down unnecessary time that is spend bar code scanning the products at the check-out counter and also communicates sale to the inventory department faster. The use of technology in every aspect of business has helped Wal-Mart accomplish its current market standing as the biggest retailer in the world. Competitors and competitive edge: The major competitors of Wal-Mart are K-mart and target. However, Wal-Mart’s solid competitive edge of everyday low prices and customer preference has been constant over the years. Apart from that, Wal-Mart also offers a one stop shopping experience with a wide variety of products and several convenient locations. Different geographic locations host a different set of competitors for wall-mart. Apart from the above mentioned, Wal-Mart’s online shopping has the mighty Amazon.com as its competition. Amazon.com started off as an online book store and after establishing a strong network it diversified into several other product categories. Even though they compete head to head, Wal-Mart has slightly edge in expertise as far as online shopping experience is concerned. It is a well-known phenomenon that Wal-Mart and Amazon.com constantly battle for the first place as far as online shopping is concerned. Both pounce upon retail opportunity and try to surpass the others in coming up with vent specific deals. But Wal-Mart has a stronger market standing and customer base which is reflected in their e-shopping statistics, making it more popular than Amazon.com. Market influences: There are several externalities that affect Wal-Mart and its operations. Even though Wal-Mart has kept up its tradition of providing affordability and convenience to its customers, there are several labor related issues that it faces. Firstly, employees at Wal-Mart are not paid adequate wages. Their pay scale and compensation packages are not very attractive. Therefore, the management has to work extra hard to provide them ease of working hours, work flexibility, employee loyalty programs etc. to keep them motivated. The strength of Wal-Mart has made it more than just a retail outlet. It has managed to become a global force that can change lives of the people. It helps communities, provides amenities the government is unable to, drives small scale store out of business etc. there are many debates regarding the positivity of the extent of hold that Wal-Mart has managed to have over the period, but the fact remains that it has not debated from it USP of selling at the lowest price possible. Use of technology and a strong network for supplies and logistics has helped it cut down its procurement prices and pass it on to the end consumers. Strategic relationships and convenience that e-commerce has enabled helps Wal-Mart maintain its position in this era of severe competition and technologically handled operations. Change in overall consumer behavior and the shift in the power from the suppliers to the customers has made brands like Wal-Mart more inclined towards using technology to speed up and maintain their business. References: Corporate.walmart.com. 2014. Walmart Corporate - Walmart Global eCommerce. [online] Available at: http://corporate.walmart.com/our-story/our-business/global-ecommerce [Accessed: 26 Jan 2014]. Wisner, J. D., Leong, G. K. & Tan, K. (2005). Principles of supply chain management. Mason, OH: South-Western. Hayden, P., Lee, S., Mcmahon, K. & Pereira, M. (2002). Wal-mart: staying on top of the fortune 500. Corporate Strategy And Public Affairs Lecture, The Graduate School Of Political Management, George Washington University, April, Washington DC. Benjamin, R. I., De Long, D. W. & Scott Morton, M. S. (1990). Electronic data interchange: how much competitive advantage?. Long Range Planning, 23 (1), pp. 29--40. Read More