Wal-Mart's Q2: 16 technology, operations and e-commerce takeaways

Wal-Mart's Q2: 16 technology, operations and e-commerce takeaways

Summary: Here's a look at how Wal-Mart is "fueling the productivity loop" in the U.S. and abroad and investing heavily in e-commerce to do what Amazon can't easily replicate.


Wal-Mart's second quarter results delivered light sales and spurred worries about the economy. But the company's ability to be an operations, logistics and information technology leader is impressive.

On a conference call Thursday it was hard to miss the information technology coursing through the comments.

Here's why these IT and operations nuggets matter. The real battleground between Wal-Mart and Amazon is playing out behind the scenes in distribution centers. Amazon's network is getting closer to the customer, but requires a heavy investment, according to Marc Wulfraat, President and Co-founder of MWPVL, who handicapped the fulfillment battle between the two retail giants on a Wells Fargo conference call.



Wulfraat's take is that you can't overlook Wal-Mart's network that already exists. Wal-Mart can build adjacent outposts to its distribution centers to cheaply serve e-commerce goals. Overall, the cost of an e-commerce business may turn out to be 4 percent to 8 percent higher as a percentage of sales than a regular retailer. Why? Processing merchandise in bulk is simply cheaper.

Here's a look at the technology and operations nuggets from the world's largest retailer.


  • Walmart.com delivered double-digit sales growth.
  • The company launched a locker test site to go with its e-commerce efforts. A scan and go pilot is underway and expanding from iOS to Android.
  • Customers are increasingly using Wal-Mart's ship from store program from Walmart.com. As a result, Walmart.com can deliver most orders in two days or less with lower costs.
  • Neil Ashe, president and CEO of Wal-Mart's global e-commerce group, said the company is investing in its global technology platform, embedding online assets into Wal-Mart's next-gen fulfillment network and integrating with the company's transportation, stores and distribution centers.
  • Ashe is looking to build "talent density" and added 200 to the e-commerce unit in Silicon Valley.
  • 35 stores are being used as "additional nodes" in the e-commerce fulfillment network. Wal-Mart's asset vs. Amazon in e-commerce is its distribution density.
  • Wal-Mart has taken an earnings hit of 5 cents a share in 2013 for e-commerce investments and the third quarter hit will be 2 cents a share.

Operations, which are driven by "fueling the productivity loop":

  • Wal-Mart's logistics team cut cost per case shipped year over year for the eighth quarter in a row.
  • Trailer loading efficiency as well as routing optimization increased cases transported by mile driven 3.7 percent in the second quarter from a year ago.
  • Wal-Mart added 1,400 lanes of self service checkout terminals in a move that increased utilization rates by 4 percent from a year ago for the U.S.


  • Wal-Mart CEO Mike Duke said the company is aiming to bring stores in markets like Mexico and China up to U.S. productivity standards. He said:
  • In Mexico, we're implementing an on-shelf availability application to target and improve in-stock opportunities. And across many of our markets, we're utilizing workforce management tools to better align associate schedules with customer traffic. These actions, among others, will contribute to International's leverage goal.
  • Wal-Mart's China team cut store hours by 12.4 percent in the second quarter and that move offset wage inflation of 11.2 percent.
  • All of Wal-Mart's international stores have integrated with the e-commerce business and are run by the same management team. Big exceptions, however, are Brazil and China.
  • International e-commerce sales were up 16 percent from a year ago. Wal-Mart launched a Drive Through Click and Collect site via its U.K. Asda unit. These sites allow you to shop online and pick up groceries when convenient. Tesco has Click and Collect in 180 stores so Wal-Mart is playing from behind.
  • Eight countries in Latin America have been migrated to Wal-Mart's Costa Rican Shared Services Center. The goal: Cut back office expenses with shared resources.
  • Global process compliance is being driven by chief compliance officers for all regions.

Topics: CXO, E-Commerce, Enterprise Software

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  • I think...

    this is the number one reason.

    •Customers are increasingly using Wal-Mart's ship from store program from Walmart.com. As a result, Walmart.com can deliver most orders in two days or less with lower costs.

    I've used this and it's usually one day.
  • Where Amazon always beats Walmart,

    from a shopper who routinely uses both:

    1. Amazon's search engine is FAR superior. I routinely complain to the Walmart webmaster over the difficulty of using its site to find what I seek. Just try searching for the same thing in Amazon, then in Walmart, to see the difference. So Amazon wins more sales.

    Seriously: someone should fire the Walmart website designer.

    2. Amazon's product descriptions are far superior. Walmart, by contrast, offers little or no useful information. Both have reviews, but the amount you can say is limited, you can't edit your review, and you can't really talk to each other via the Walmart site.

    3. Although Walmart's Ship to Store and Home Free delivery are sometimes useful, the website sometimes changes the 'My Store' on you, and you don't know it changed. So your delivery goes to the wrong store. Of course, nothing can beat Amazon Prime.

    4. Amazon offers many sellers from all over the place. Walmart has some selection, but usually the other sellers are pricey or have huge shipping charges; which, coupled with the horrible website structure and search, lack of descriptions, etc., dulls the shopper quickly.

    Don't get me wrong: just this morning I was shopping Walmart online, then actually visited the store only five minutes from me, to decide what to have shipped, and what to buy in person. Yet for every dollar spent at Walmart, I'll spend $10 at Amazon, due to its superior ease-of-use.
    • Absolutely correct!

      Nice job brainout. You have provided a blueprint for Walmart as to why Amazon is still far ahead. I'm an Amazon Prime customer who also shops at Walmart (physical stores & online) a fair amount. The things brainout listed are why Amazon is still the best when you're online.

      But Walmart is still a 900-ton gorilla in the room. It has the resources to eventually challenge Amazon.
  • WM security weak?

    I ordered (2 books) online from Walmart 1x & the next day someone was using my CC # at Walmart online. My bank stopped payment but I wont order online from WM again.