Reference no: EM132971197
Read the article on Walmart's Expansion Strategy below and answer ALL questions in Section A.
As the boundaries between traditional retailing and online retailing have begun to blur, Walmart has responded by expanding its presence in e-commerce via integration strategy. In 2016, Walmart acquired Jet.com, an innovative U.S. e-commerce start-up that was designed to compete with Amazon. Jet.com rewards customers for ordering multiple items, using a debit card instead of a credit card, or choosing a no-returns option; it passes its cost savings on to customers in the form of lower prices. The low price approach of Jet.com fit well with Walmart's low-price strategy. In addition, Walmart hoped that the acquisition would help it to accelerate its growth in e-commerce knowledge and capabilities, increase its breadth of online product offerings, and attract new customer segments.
Walmart, like other brick and mortar retailers, was facing a myriad of issues caused by changing customer expectations. Consumers increasingly valued large assortments of products, a convenient shopping experience, and low prices. Price sensitivity was increasing due to the ease of comparing prices online. As a traditional retailer, Walmart was facing stiff competition from Amazon, the world's largest and fastest growing e-commerce company. Amazon's seemingly endless inventory of goods, excellent customer service, expertise in search engine marketing, and appeal to a wide consumer demographic added pressure on the overall global retail industry.
Jet sells everything from thousehold goods and electronics to beauty products, apparel, and toys from more than 2400 retailer and brand partners. Jet has also continued to expand its own offerings with private-label groceries, further increasing competition with Amazon's AmazonFresh grocery business. In 2007, Walmart made several other acquisitions of online apparel offerings and further expanding Walmart's presence in e-commerce. These include ShoeBuy (a competitor of Amazon-owned Zappos), Bonobos in menswear, Moosejaw in outdoor gear and apparel, and Modcloth in vintage and indie womenswear.
One year later, Jet is averaging 25000 daily processed orders and is continuing to act as an innovation pilot for Walmart. Over the same period, Warlmart's U.S. e-commerce sales had risen, climbing 63 percent in its most recent quarter, and the stock had gained 10 percent over the last year. While Walmart's e-commerce sales still pale in comparison to Amazon, this was significantly better than the broader retail industry and represents a promising start for Walmart, as the retail industry continues to transform. (Source: Thompson et al., 2020)
- What type of integration strategy adopted by Walmart in expanding its business?
- What are the benefits of using this strategy?