Online Sales Accounting
The goal of this assignment is to analyze Walmart’s e-commerce situation and strategy. As the worlds largest retailer, Walmart has built thousands of brick-and-mortar stores in the United States, Mexico, and elsewhere. Although a success story when it comes to traditional retail locations, Walmart has struggled with its e-commerce efforts, with recent online sales accounting for about 3 percent of the companys $300 billion in annual sales. The company has tried several different e-commerce strategies in the past, but none of them was an overwhelming success. Some company insiders objected to the pricing strategy used for online purchases; they were fearful that Walmarts lower prices online would take customers (and sales) away from the retail locations. Doug McMillon, Walmarts CEO since 2014, believed a significant change was needed in the companys e-commerce business, and he recently made changes in a big way. Over the past two years, Walmart spent billions to acquire several online companies to expand its e-commerce business in an effort to take a small bite out of retail giant Amazons success. In 2016, Walmart purchased Jet.com, an e-commerce site that sells a little bit of everything (books, clothing, electronics, etc.) at discount prices. Once the $3 billion acquisition was completed, Jets co-founder and CEO, Marc Lore, who now runs Walmarts e-commerce platform, worked with McMillon to identify other established online companies to add to their e-commerce portfolio and add they did. First Walmart purchased footwear e-tailer ShoeBuy for $70 million in January 2017. The following month, Walmart bought outdoor specialty retailer Moosejaw for $51 million. Then in March, Walmart paid $75 million for ModCloth, an eclectic shopping site for womens fashions. Walmart is also said to be in negotiations to buy Bonobos, a hip fashion retailer geared to millennial males. Reaction to the acquisitions has been mixed, depending on whom you ask. Retail analysts applaud the companys radical move, pointing out that several well-known traditional retailers have closed their doors or filed bankruptcy because they failed to take part in the e-commerce revolution. Fashionistas, on the other hand, are lukewarm about the move. However, McMillons decision to allow online retailers to operate independently may help retain loyal customers. The new e-commerce strategy may also lure typical in-store shoppers to take advantage of the expanded offerings available through both Walmart.com and Jet.com. In the textbox, answer the following questions: What are some advantages of Walmart purchasing established web businesses? What impact is Walmarts acquisition of nontraditional retailers likely to have on the shopping habits of Walmarts customers? How will the aggressive e-commerce plan implemented by Walmart affect operations at its retail locations? Sources: Brad Stone and Matthew Boyle, Amazon Wont Know What Hit Em! Bloomberg Businessweek, http://www.bloomberg.com, May 8May 14, 2017; What an Acquisition of Bonobos Would Signal About Wal-Marts Strategy, Forbes, http://www.forbes.com, May 9, 2017; Walmart Acquires Niche Online Retailers, to the Dismay of Hipsters, Denver Post, http://www.denverpost.com, March 24, 2017; Alana Abramson, Walmart Acquires Online Womens Retailer ModCloth, Fortune, http://fortune.com, March 17, 2017; Phil Wahba, Walmarts 29% Online Holiday Season Growth Sends Shares Jumping, Fortune, http://fortune.com, February 21, 2017; Laura Heller, Take That Amazon: Walmart Buys Moosejaw for $51 Million, Forbes, http://www.forbes.com, February 15, 2017; Walmart Acquires ShoeBuy for $70 Million, Business Insider, http://www.businessinsider.com, January 6, 2017. Please make sure to answer the 3 questions and fully analyze Walmart’s e-commerce situation and strategy.