Just as Amazon Web Services is the profit center that powers much of Amazon's other businesses, Walmart CEO Doug McMillon has been increasingly interested in expanding his company's profit pools beyond its core retail business.
Starting Wednesday, small- and medium-sized retailers can purchase the technology Walmart has developed to allow shoppers to buy items online and pickup the purchases at the store. These businesses also will be able to add products to Walmart's online marketplace with just a few clicks. To offer the suite of cloud-based services, Walmart has partnered with Adobe, which will sell the software through a subscription.
"When we started on the journey, Covid had just hit," said Anshu Bhardwaj, vice president of technology strategy and commercialization at Walmart Global Technology. "We reaped the benefits of getting on this omnichannel journey early on."
Walmart saw sales soar both online and in-store as the pandemic took hold. While some other retailers were forced to close stores to help contain the spread of Covid-19, Walmart was deemed an essential retailer and remained open. Some customers, looking to limit the time they spent inside stores, took advantage of Walmart's buy online, pickup in store options. These developments accelerated the company's e-commerce growth. The retailer's online sales jumped 79% in the fiscal year ended Jan. 29, with its pickup and delivery sales up triple digits compared with the prior year.
Just 7% of U.S. retailers had a "buy online pickup in store" option enabled in January 2018. The pandemic accelerated that rate to 22% of retailers as of last month, according to the Adobe Digital Economy Index.
A significant opportunity remains. As of last December, Adobe and market researcher IDC estimated the total addressable market for content and commerce software as a service was worth around $44 billion.
For those asking why Walmart would want to help its potential rivals succeed, Bhardwaj said these smaller businesses will be served regardless.
"Digitization is happening everywhere as the consumer is evolving," said Bhardwaj. "There's no choice but to evolve with them."
Walmart's size and scale and its proximity to 90% of the U.S. population within 10 miles of one of its stores gives it a substantial advantage. Further, Bhardwaj said, "we really want to serve our communities, our shareholders, our stakeholders and the community better."
She noted that about a year and a half ago, McMillon changed the language in a slide he uses in presentations from "serve our shareholders" to "serve our stakeholders." Bhardwaj said it was a meeting with McMillon that spurred her idea to sell the technology Walmart has built to other retailers.
Bhardwaj has been involved in other key Walmart tech initiatives. Notably, she led the successful Scan & Go technology at Sam's Club, which allows customers to ring up purchases with a smartphone as they add items to their shopping carts.
The new software business opens up a potential revenue stream for Walmart and it fits in with its strategy to create new businesses that serve new customers and allows profit to flow back into the company to fund further innovation.
Neither Walmart nor Adobe is publicly sharing expectations for how big a business opportunity this could be, but Bhardwaj said, "I'm betting my life on this," as her current role with the retailer was created to make her idea a reality.
For Adobe, the Walmart partnership increases its visibility.
"We can now offer a more holistic solution, a best-in-class omnichannel experience," said Peter Sheldon, senior director of commerce strategy at Adobe, in an interview. "From Adobe, [these businesses] will get best-in-class e-commerce experiences, and best-in-class omnichannel experiences from Walmart."
The small and medium retailers will use Adobe to power e-commerce sites, including the shopping cart function, search, navigation and product recommendation capabilities. (Walmart doesn't use Adobe's commerce software for these functions for its own website. It has its own technology.)
Small and medium businesses, as well as retailers with $1 billion or more in annual sales, already use a variety of Adobe's e-commerce products including Rite Aid, Verizon, Unilever, Coca-Cola, HP, Honeywell, Trader Joe's and more.
Walmart is providing the technology that powers the picking and packing of online purchases by employees and the geofencing technology workers need to know when customers arrive to pick up the orders.
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July 28, 2021 at 11:01AM
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Walmart's latest business: Selling its e-commerce tech to other retailers - CNBC
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