Wal-Mart's fear of the Googleplex

Wal-Mart's fear of the Googleplex

Summary: The New York Times has a story by Steve Lohr about how upstart Google is disrupting many traditional business sectors. As an example, Wal-Mart views Google as a threat.

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TOPICS: Google
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The New York Times has a story by Steve Lohr about how upstart Google is disrupting many traditional business sectors. As an example, Wal-Mart views Google as a threat. Lohr quotes Jim Breyer, a venture capitalist from Accel Partners who sits on Wal-Mart's board, who says that Google could threaten the retailer's business by telling shoppers where better bargains can be had in proximity to Wal-Mart stores. It's good news for buyers, who will have information at their fingertips to make more informed decisions.

It will also force Wal-Mart, and Walmart.com, to figure out how to keep customers happy beyond low prices and product selection. Wal-Mart might have the leanest and smartest (RFID) supply chain in the works for gaining efficiencies, but Google is building a scalable, massively parallelized, distributed infrastructure for serving billions of users and delivering increasingly targeted content and services on any device. Do you go to Wal-Mart or Google (Yahoo, MSN, etc.) first and last in the product purchase cycle?

Google is already impacting advertising, stirring up a hornet's nest over book search and enabling all kinds of mashups and new services that could disrupt everything from real estate sales and Craig's List to television and communications.

To be fair, Google is simply has the most buzz and momentum today, and a growing power base and employee count. Yahoo and  Microsoft, in particular, are other powerhouses striking fear in the business plans of mature and emergent businesses that could be disrupted by the continued evolution of the Internet and digital lifestyles.

As the Web giants gather more content, harvest and harness more data about individual and group user behavior and preferences and improve the scope and quality of search, commerce will become more about "pull" than "push" in the words management consultant of John Hagel:

Over the past century, institutions have been perfecting highly efficient approaches to mobilizing resources.  These approaches may vary in their details, but they share a common foundation.  They are all designed to “push” resources in advance to areas of highest anticipated need.

In the past decade, we have seen early signs of a new model for mobilizing resources.  Rather than “push”, this new approach focuses on “pull” – creating platforms that help people to reach out, find and access appropriate resources when the need arises.

The pull world makes you think the the network has ambient intelligence and values your time and attention. That's tough for any single retailer to do...

Topic: Google

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  • WalMart's fear of the Googleplex?

    If WalMart believes its own PR and advertising it should look at Google as another marketing opprotunity. The "Reduscing Prices" shtick isn't anything more than a variation of eBay's typical operation. Can't sell something at $29.99 cut the cost to $25.00 and see if you get any more takers? The idea of "pull" predominating over "push" strategies is nothing more than access versus convenience. I learned about push and pull strategies in both advertising and product channel delivery methods back in 1972. There's nothing new about it, the difference is now it can be pressed into service when describing "brick and mortor" versus Internet "virtual stores".
    Xwindowsjunkie
  • Over-reaching.

    If any company shouldn't mind comparison shopping online it's WalMart. They rely on lower prices than the competition.

    And though the story in the Times mentions a $200 difference in the price of an expensive TV set, that's not the main part of WalMart's sales or inventory. On low cost items, discovering a slightly cheaper price elsewhere on a few items would not justify a trip.

    And that's assuming people are comparison shopping. Most people use cellphones for talking, and nothing as complex as web searching, I think.

    (An aside:
    It's aggravating to see people talking on cellphones when they shop, and worse knowing they're getting help from distant advisors on their selections. Proves the research conclusion that having too many choices leaves people hesitant and ready to believe they made the wrong choice.)

    So WalMart was included as a well-known name willing to supply a (mild) quote, I think, and not as a company in actuality very threatened by Google.
    Anton Philidor
    • True, for the moment.

      But every tic of the clock changes the landscape here. Marketing a product is going to make some huge changes and it will be around the internet if one form or another.

      Currently manufactures are under unbelievable pressure from the retailers (Wally World in particular) to reduce their costs, even if it means closing American factories and moving to China. (The preferred choice of Wally World.)

      One way to cut costs will be to do as the retailers have and remove the middleman, only this time the retailer is the middle man. Such a model would absolutely scare the large retailers, and it should. Manufactures will quickly move to the web as their distribution channel over giving the "store" a big chunk. It will start as a trickle and end up being a flood...
      No_Ax_to_Grind
      • Fear of Amazon

        There was a time when the internet was supposed to displace retail stores. With the savings on bricks-and-mortar, online sellers would always be cheaper, and it's more convenient to browse than to shop.

        As you know, that's not what happened. Many online sellers collapsed during the tech stock massacre.
        (That's more relevant than "dot com bubble" because the whole late 90's "boom" was ultimately built on an over-valued stock market for tech stocks.)

        The internet is just one distribution channel, used by some people some times. And single manufacturer distribution is the least effective approach, because people who browse very often don't know exactly what they want. I think they're looking for suggestions and want to compare within a category.

        So, you're right about the internet having its uses, but I think you're exaggerating the potential impact.
        Anton Philidor
  • Not that I'm any fan of Wal-Mart by a longshot

    But I would read more into this story as the ZDnet
    "Over-Hype" of Google.(i.e. anything Google will do will destroy the competition, even though, to date, they have yet to put anything out that dcoes just that)

    Wal-Mart isn't stupid or they would not be in the postition they are at roght now. In many of the areas around where we live, the Wal-marts are place next to the "low to middle income" apartments, or in the farm country. Wal-Mart knows what it's doing.
    How many of these people are going to go online searching for an item that they can get right next store for the "garanteed low price"?

    As for many that do, Wal-Mart is the last place you would see many of those people shopping...
    John Zern
  • Not that I'm any fan of Wal-Mart by a longshot

    But I would read more into this story as the ZDnet
    "Over-Hype" of Google.(i.e. anything Google will do will destroy the competition, even though, to date, they have yet to put anything out that dcoes just that)

    Wal-Mart isn't stupid or they would not be in the postition they are at roght now. In many of the areas around where we live, the Wal-marts are place next to the "low to middle income" apartments, or in the farm country. Wal-Mart knows what it's doing.
    How many of these people are going to go online searching for an item that they can get right next store for the "garanteed low price"?

    As for many that do, Wal-Mart is the last place you would see many of those people shopping...
    John Zern
    • Good point.

      If any of this comparison shopping requires gadgetry, many of WalMart's clientele will be unable to afford it, and unlikely to spend the money on elaborate electronics if they could.
      Anton Philidor
    • Google is overrated and so is Walmart.

      Search for something, click on a ad. A lot of people are using ad blocking software on their browsers. I think the sponsers have been snowed. When the sponsers realize this, the stock will fall fast.

      If you go to KMart/Sears any product that is carried by Walmart is the same price. Go to the competition so you can get your shopping done and keep your toes. Also if Walmart is really the lowest price, they shouldn't be fearing Google.
      osreinstall
      • Wal-Mart vs. Google

        "Also if Walmart is really the lowest price, they shouldn't be fearing Google."

        Excellent point! Wal-Mart has always been known for low prices; that's their cornerstone. I believe in an earlier post, someone said that Wal-Mart wouldn't be where it is by being a bad business. Perhaps some of the merchandise isn't necessarily of top quality, but that's another story.

        In any case, this will be an interesting "test" for Wal-Mart!
        X Marks The Spot
  • Google is worth fearing

    Their income is about $6bn a year, on which they make $1.6bn profit.
    Compare this to Microsoft, income is $40bn a year, and profit $12bn.
    Essentially Google is 1/8 the income of Microsoft with a similar profitability.

    However, google doubled it's income last year, whereas Microsoft is pretty static year on year.

    It's interesting that google have hired a very large number of top notch scientists etc.

    I just *like* google's products by the way, I've been hooked on their search engine for years, nothing else is any good. Before google arrived, the internet was becoming unusable, it was really hard to find anything you wanted. Google earth is great, and Google picassa is wonderful. The yahoo equivalent to picassa is ok, but picassa is "just right".

    Microsoft banged on for a long time about desktop search, I've got Microsoft and google desktop searches, but I never use them.

    Personally, I think Google are going for the "inherit the web" situation. They could usurp amazon, ebay, microsoft live, yahoo, msn, hotmail.

    They'll get more business information out, target adverts very well, and let you buy/sell more easily.

    Ebay is frankly hell right now.
    Amazon is good, apart from their selling engine is very hard to drive. (bit of a quirky user interface).

    Microsoft is unlikely to add CRM type features to hotmail, for fear of undercutting it's CRM stuff, but GMail will probably just offer it.

    Google has a lot of freedom since it's business model is funded by advertising (and well targeted advertising (1) gives a better user experience (2) gets a much higher conversion ratio). Google also makes extremely good use of it's business information. (eg: identifying patterns in human behaviour).
    There is no corporation similarily placed to inherit the web, and they don't have their hands tied by any link to legacy products like Microsoft is tied to Microsoft office.
    hipparchus2001
    • there is the point

      Google is tied to the web as guess what a SEARCH ENGINE nothing more poll the average joe user with this question Google is what? a software company? a survived .com? most people asociate google with search engine. No matter home much they are wanting to turn into a software company. Search is what they are known for stick to that!!!. Just as Microsoft is associated to Windows
      Power User
  • They Should Fear Google and the WEB

    What's good for the goose is good for the gander. If they were carrying and selling quality merchandise instead of the junk they pedal to poor people and fools that don't see that one is better off buying quality items that last instead of buying the same junk over and over again, costing them more than the quality merchandise they should have saved for and got in the first place they would have nothing to fear.Or maybe if they were paying there employees fairly (especially women and black employees) Their employee attitudes would be better reflected in customer service. They should worry, even giants fall and they fall hard. sounds like this--- OUT OF BUSINESS
    slow_motion
  • Don't Fear The (Googleplex) Reaper!!!!!

    What's good for the goose is good for the gander. If they were carrying and selling quality merchandise instead of the junk they pedal to poor people and fools that don't see that one is better off buying quality items that last instead of buying the same junk over and over again, costing them more than the quality merchandise they should have saved for and got in the first place they would have nothing to fear.Or maybe if they were paying there employees fairly (especially women and black employees) Their employee attitudes would be better reflected in customer service. They should worry, even giants fall and they fall hard. Sounds like this--- OUT OF BUSINESS
    slow_motion
  • Don't Fear The (Googleplex) Reaper!!!!!

    What's good for the goose is good for the gander. If they were carrying and selling quality merchandise instead of the junk they pedal to poor people and fools that don't see that one is better off buying quality items that last instead of buying the same junk over and over again, costing them more than the quality merchandise they should have saved for and got in the first place they would have nothing to fear.Or maybe if they were paying there employees fairly (especially women and black employees) Their employee attitudes would be better reflected in customer service. They should worry, even giants fall and they fall hard. Sounds like this--- OUT OF BUSINESS
    slow_motion
  • america's walmart-sized tumor

    Walmart on the offensive elsewhere:

    http://www.walmartmovie.com/wmtv/2005/11/nothing_but_greed_for_them.php

    over this:

    http://www.walmartmovie.com/find.php
    chris jablonski