Walmart transforms retail in the world’s top eCommerce markets

Walmart is combining digital expertise with its massive store footprint to reshape the online retail landscape. The retail giant recently acquired innovative eCommerce company Jet.com and formed a strategic partnership with China's largest online retailer, JD.com. These bold moves position Walmart to transform eCommerce not just in the U.S., but globally.

With the recent acquisition of Jet.com, Walmart is expanding its domestic customer base and serving its existing customers in new ways. By aligning with China's largest online retailer, Walmart adds a powerful logistics and distribution network to help reach this high-opportunity global market.

Walmart already has a significant digital presence with Walmart.com, which offers more than 23 million products for sale. The site offers in-store pickup for direct orders made online at most of its 4,600 stores in the U.S., and free home-delivery on orders of $50 or more.

"Walmart.com allows us to segment for personalization and show a customer the right product at the right time," says Seth Beal, senior vice president of global marketplace for Walmart.com. "We are focusing on what our customer expects us to do, which is offer a broader scope of items online, and make it easier to get those items to a home or store."

The company added a digital marketplace in 2009, which now features products from more than 3,000 third-party vendors who are trusted sellers in popular categories like apparel, electronics and home. The marketplace has helped Walmart.com grow its product assortment from 8 million to more than 23 million items since last year.

Customers can shop this assortment on the go or from the couch at home on Walmart's mobile app. This past year, Walmart added enhancements to make buying on its mobile app easier, including a new home screen experience and easier browsing and navigation within categories.

The mobile app is also a powerful shopping tool in Walmart stores. The Walmart Pay feature allows customers to pay at checkout without opening their wallets. The app has proven so helpful that in-store app usage has increased by 25 percent over last year.

The app and expanded product assortment are helping Walmart connect with an additional customer base, according to Beal. "New customers are coming to Walmart.com for products that we didn't historically have."

In August of 2016, Walmart announced its acquisition of Jet.com. The shopping site, launched in July 2015, quickly captured the attention of other retailers and industry analysts for its revolutionary basket economics pricing model.

Jet shoppers are incentivized for making choices that lower a retailer's supply chain and distribution costs. For example, because it cost eCommerce players like Jet more when consumers pay with credit, Jet passes on transaction fee savings to shoppers who pay with debit cards. A customer who selects several products that can ship together (instead of spreading that basket among different retailers) will save even more money on that order. Customers see these savings in real time, adding a gamification aspect to the shopping experience.

"Our customers fill baskets that are higher in dollars than the industry average," says Liza Landsman, Jet's chief customer officer. Landsman says that Jet.com, like Walmart.com, has a growing base of young, urban customers.

While other eCommerce sites select specific retailers ahead of time to provide each item, Jet allows retailers to set their own pricing rules within the platform. For example, a retailer can specify shipping cost parameters for items across different zones, or a specific price drop for purchasing multiple items. This allows several retailers to compete for each customer purchase.

Jet will be operated as a separate brand within the Walmart portfolio, but Beal says that Walmart will explore economies of scale opportunities by leveraging Jet's back-end technology across other platforms.

In October, Walmart made headlines when they announced an increase in investment to approximately 10 percent in JD.com, China's largest online retailer. With more than 420 Walmart stores in China, this move positions Walmart for extensive reach in the world's largest eCommerce market.

As part of the investment, Walmart will sell imports from the United States via its global store on JD.com. Sam's Club, which has 14 stores currently in China, has opened a flagship store on JD.com. Walmart and JD also launched a two-hour food delivery service on the JD Daojia mobile app. The service debuted in October 2016 and has quickly expanded to Chinese metro areas including Shenzhen, Guangzhou, Beijing, Shanghai, Chengdu, and Wuhan.

Partnering with JD will help Walmart extend its reach to hundreds of millions of mobile users. China currently has 1.3 billion mobile phone users, and JD's most recent earnings report showed that nearly 80% of orders fulfilled in Q3 were placed via mobile.

"Walmart is bringing a seamless shopping experience to our customers in China to shop in our stores or on their mobile phones," said Ben Hassing, SVP of eCommerce, Walmart China. "JD's extensive logistics network throughout China allowed us to immediately cater to hundreds of millions of customers who might not have a store location near their home or office."

JD offers same- and next-day delivery through its own warehousing and distribution network that covers a population of more than 600 million consumers. This gives Walmart an edge in expanding both its digital and store footprint in China, according to analysts.

"China online retail has developed based on courier-based logistics, where everything is delivered directly to shoppers. Coming in and building a logistics network that can blanket the country, that's not doable economically," says Zia Daniell Wigder, chief global content officer at Shoptalk. "JD operates its own logistics network, and now this gives Walmart access to hundreds of millions of online shoppers. This is a great play to suddenly have a large footprint in China."

Wigder says that the move is especially powerful for Walmart because the Chinese retail market is more consolidated than it is in the U.S. In China, only a few large players dominate the industry, far ahead of a field of much smaller retailers.

The reception from consumers has been positive. "After Walmart launched on the JD Daojia app, shopping has become very convenient for us," says one customer, a 35-year old homemaker in Shenzhen, "we like the two-hour home delivery service."

There is a common thread in Walmart's move to partner with JD, the acquisition of Jet and its expansion of Walmart.com – the company's commitment to seamless shopping. Seth Beal emphasizes that Walmart's growing focus on eCommerce is designed to improve the overall customer experience, both in-store and online.

"As technology changes how America shops, we see people responding to what makes their lives easier and saves them money," Beal says. "That's what the store experience, app and Walmart.com work together to do."