Wal-Mart Flexes Web Muscle By Adding 900,000 New Items From Outside Retailers - InformationWeek

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IT Leadership // CIO Insights & Innovation
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9/1/2009
09:21 AM
Bob Evans
Bob Evans
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Wal-Mart Flexes Web Muscle By Adding 900,000 New Items From Outside Retailers

On the same day it created 1,500 jobs in deeply depressed Michigan by announcing seven new stores, Wal-Mart also revealed it is expanding the scope and scale of Walmart.com by offering on the site almost 1 million new items offered by other merchants. How about your company: are you innovating or standing pat?

On the same day it created 1,500 jobs in deeply depressed Michigan by announcing seven new stores, Wal-Mart also revealed it is expanding the scope and scale of Walmart.com by offering on the site almost 1 million new items offered by other merchants. How about your company: are you innovating or standing pat?The Associated Press described Walmart Marketplace this way:

The Walmart Marketplace has products from categories that include home, baby, toys, apparel, sporting goods and sports memorabilia. The company said it picked the retailers - including eBags, CSN Stores and Pro Team - because they have large product assortments and solid customer service track records.

Retail analyst Scot Wingo said the marketplace strategy pioneered by Amazon makes perfect sense for Walmart.com:

Since 2007, we've been predicting that Amazon's formula would be decoded and as an offshoot of that we would see an explosion of marketplaces amongst the top 20 retailers. Since then we've seen folks like Overstock, Buy.com, Pixmania and play.com add vibrant third-party marketplaces onto their 'first-party' retail business. The strategy just makes complete sense:

• You are spending large $ to build a brand and bring consumers to your site. • Consumers love selection • A 'bad' consumer experience is when they come to your site and don't find what you are looking for. • Even the mega players can only manage so much selection • Long-tail selection can be painful and expensive (eats into warehouse space) • You need to focus on your core (shoes or top 10 sellers or the value buyer, etc.)

Wingo noted that Walmart.com ranks 14th on Internet Retailer's list of the largest online retailers with $1.7 billion in revenue, while Amazon tops the list with online sales of $20 billion. So Wingo sees the emergence of Wal-Mart Marketplace as more of a threat to eBay than it is to Amazon:

eBay is probably more exposed to the WMMP because they have a more nascent focus on the high-end and have some early wins with Buy.com, TigerDirect and eCost, but as they work on getting more name-brand retailers on eBay.com, they will be fighting for mind-share with this new player.

And at the same time as it's dramatically expanding its online capabilities, Wal-Mart is keeping up the pressure on its bricks-and-mortars competitors by continuing to expand during the global economic downturn, the Detroit Free Press reports:

Wal-Mart Stores Inc. plans to open seven new or expanded store in Michigan in the next three months on top of three already opened this year, the retailer announced today. That makes Wal-Mart one of the few national retailers taking a chance on Michigan as the economy has worsened. Its main competitor in the state, Grand Rapids-based Meijer, also continues to expand in the state. It just announced plans to open a store in Detroit near the state fairgrounds.

For some CIOs, the brutal economy of the past 12 months has resulted in a heads-down attitude with cost-cutting the one and only priority. The problem with that mentality is that much of the rest of the world has not gone into suspended animation over the past 12 months, and instead have found a way to control costs aggressively while also pushing ahead with innovative plans to pursue new business models, new approaches, and new products and services.

Wal-Mart's moves-online and with physical stores-serve as a clear indication that the heads-down approach simply will not suffice.

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