Internet Strategy: Wal-Mart's Evolving Approach (2000)

BRIEF HISTORY OF WAL-MART STORES, INC. Wal-Mart, for whom does this name not sound familiar? Wal-Mart Stores, Inc. was founded in 1945, and its main offices are located in Bentonville, Arkansas. The main business field in which Wal-Mart operates is retailing through discount stores, supermarkets, specialty department stores, and restaurants. It also provides services through its family entertainment centers. Wal-Mart currently operates 1,821 Wal-Marts, 650 Wal-Mart super centers and 433 Sam's Clubs in the United States. Internationally, the corporation has over 974 locations (Wal-Mart's 2000 plans, 1999). Additionally, Wal-Mart employs around 825,000 people. Its annual sales reach over $137 billion annually. Wal-Mart's 2000 plans for growth represent 34 million square feet of additional retail space or an 8 percent growth in square footage. Wal-Mart is famous for being a leader in offering the lowest prices to consumers. These prices are possible because the corporation has been able to efficiently achieve a low cost competitive advantage. Since 1996, Wal-Mart has decided to compete in the electronic market by launching its web site named www.Wal-Mart.com. PRINCIPALS AND CHARACTERISTICS OF INTERNET STRATEGY One main phenomenon that has marked the last decade is the emergence of Internet. The Internet constitutes an effective means for communicating and exchanging information. On the other hand, brick-and-mortar retailers have used the Internet as a new distribution medium. Online retailing and shopping are gaining popularity year after year. As the numbers show, from 1995 to 1998, the Internet economy grew 175 percent (Allen, 1999). It now accounts for over $300 billion in revenue and 1.2 million jobs. This is due to the convenience that the Internet brings to the consumer. The Internet has also permitted the creation of virtual retailers, which are characterized by having only an online presence, such as Amazon.com. One reason that drives business organizations to go online is to add value to their customers by providing them with attractive and effective web sites. On the other hand, some companies use the Internet as an effective tool for exchanging information within the organization or with strategic partners, commonly known as the use of Intranets and Extranets, respectively. In order for an Internet strategy to be effective, it must consist of several key principals and characteristics. One retailing giant that learned the importance of having an effective Internet strategy is Wal-Mart Stores, Inc. When implementing an Internet strategy, the retailer is advised to acknowledge information concerning the competitive environment. The firm carefully observes the competitors' Web sites, how they are designed, what services are offered and what differences could potentially make them successful. Wal-Mart's first Web site lacks many essential features and was not as attractive as those of its main competitors. Only after a company's Internet strategy has been clearly formulated, can the company begin to focus on effective implementation through the design of the given firm's Web site. The appearance of the Web site is important because it will reflect the firm's image, and may often represent the only contact the firm will have with its customers. Therefore, an attractive, functional, effective, and fast-loading site remains as key elements to a successful online presence. However early on, Wal-Mart did not clearly state its objectives and strategy concerning its decision to go online. Wal-Mart's initiative of invading the Net was more due to their jumping on the bandwagon instead of a rational well-planned Internet strategy. A retailer willing to achieve a competitive advantage through its online presence has to integrate the Internet into its core functions. Accordingly, the retailer is suggested to equally allocate its resources and capabilities among its departments. …