Digital Transformation of Walmart

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Challenges

Walmart is one of the biggest retail companies globally, with significant market share in Asia Pacific. The corporation is known for its chain of hypermarkets, grocery shops, and departmental stores. Additionally, an essential strategy in their marketing plan is the provision of massive discounts to its clients. Because the company is a multinational, it has several regional headquarters in its international markets. For example, it operates such an office in Hong Kong, which serves the entire Asia Pacific market. Notably, the multinational has employed various approaches to ensure that their penetration into overseas markets has been successful. One can argue that the use of discounts has been a significant contributor to the company’s success in the Asia Pacific regional bloc. This is due to the fact that the cultural expectations of the societies in the area reveal that consumers like to bargain for their purchases. Therefore, the realization that they are getting more affordable options is a vital aspect.

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This essay looks into how the company, Walmart, has overcome marketing challenges in the digital era. It is vital to point out that the Internet has changed the way consumers and brands interact with each other. Whereas some organizations have mastered how to use digital platforms to their advantage, others have not. This can mainly be attributed to challenges faced while incorporating digital approaches in marketing. Critically, it is arguable that the decision to expand to other markets was necessitated by the growth perceived to be related to online shopping. The paper will also highlight some of Walmart’s ways of transforming their marketing practices and thinking in response to the identified challenges.

Ideally, all markets face the same kind of challenges, but their interpretation of the same is what differs. According to Žarkić-Joksimović and Marinković (2018), one primary challenge Walmart has faced in the global market is competition. This is in relation to both local and international companies that have more market share in the regions Walmart has penetrated. Many multinational companies often have to decide whether to partner with a local company or build their brand themselves within the international markets. However, in the digital era, a significant number of brands are using the latter to penetrate markets. It is vital to note that the use of digital platforms for marketing in other regions is normally for awareness prior to penetrating the market. To put this notion into context, company A will start advertising to target consumers in India a few months before announcing they are opening a retail store in the same country.

It is arguable that Walmart failed to engage with their potential consumers online strategically, and used a more traditional approach to enter, for instance, the Asia Pacific market. Debatably, the giant’s marketing department failed to grasp the importance of omnichannel in ensuring that their international stores were as successful as their US shops. Competition from both local and international companies has severely affected the company’s ability to make profits as the rivals have mastered omnichannel use for this specific purpose. Additionally, the challenge was enhanced by the fact that the marketing department believed that due to the fact that it was extremely successful in the US, it would also record near similar profits in the international markets. Therefore, toward this end, much of the strategies employed in the US market (when the public had not fully utilized the digital era) were used to penetrate new regions.

The company’s second challenge in marketing during the digital era is the increase in e-commerce. As mentioned, Walmart US had been in operation before the concept of digital marketing was fully explored. Due to this, a significant number of the company’s marketing objectives were highly traditional, including the fact that they do not engage in e-commerce. Entry into the Asia Pacific market will be used to explain further. It can be stated that the company used a traditional approach to penetrate the stated market. It did this by getting a local partner who was able to sell on behalf of the giant retailer. However, with time, e-commerce in the region was boosted by regional policies that not only made it easier for people to buy international products online, but also for local companies to participate in acquiring a share of the market actively. In turn, this raised competition for Walmart, who were already struggling with getting the right marketing strategies for the region.

Ideally, the marketing department failed to understand the importance of a combined approach, inculcating both traditional and modern marketing strategies. Žarkić-Joksimović and Marinković (2018) note that the political and economic environments are often not considered when planning marketing activities during the digital era. In the traditional sense, these factors are considered when doing the political, economic, social, technological, legal, and environmental analysis (PESTLE) as the organization tries to enter a new market. These elements are of special importance due to policy development that might affect the plans made and strategies employed. Arguably, this is not a challenge faced by Walmart alone as many marketing managers have failed to appreciate the combined approach, and rather opt for one strategy (either traditional or digital).

A third challenge of marketing in the digital era is the use of generated insights. Žarkić-Joksimović and Marinković (2018) observe that digital analytics were created in an attempt to help companies using e-commerce to understand their online audience. This information can then be used to help shape consumer engagement and even customize the products and services offered by the company. Additionally, the information is critical in understanding the different trends that people who interact with brands online are supporting. Žarkić-Joksimović and Marinković (2018) explain that there is a debate on whether the behaviors of consumers online is similar offline. The importance of appreciating this is in the fact that Walmart does not offer e-commerce but rather uses digital marketing purely for awareness of the brand and its products. Therefore, the marketing department has faced several challenges trying to connect the two platforms – their physical store and their online marketing activities.

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It is arguable that the failure to connect the two mentioned aspects is due to shortcomings in understanding the digital insights. One pertinent question that has to be asked is, what does the insight mean for the company? It is critical as it allows marketers to customize the consumer experience. Arguably, failure to fully answer this question (depending on the recorded insight) can either lead to the wrong strategies being employed for consumer engagement, or failure to understand the consumer at all levels. Regarding Walmart, it is arguable that the marketing department has failed to consider the meaning of the insights they collect. This can perhaps be attributed to the fact that the company does not participate in e-commerce; thus, it sees no need to analyze insights. However, even without the virtual store, the digital analytics can help a company understand different aspects of its offline consumers.

The third challenge ties closely with the issue of talent gaps, which can be perceived as a risk as well. Multinationals have hired digital marketers who are tasked specifically with analyzing insights received from the digital front. These professionals also engage with consumers to know both their online and offline behaviors so that they can customize their marketing strategies to the needs of the target audience. Because the company does not fully utilize its insights, it has not properly filled the talent gaps that arise from the same. It is critical to note that constant posting and answering questions posed on social media is not the same as active digital marketing. Proper talents are needed to both create the strategy and ensure effective implementation of the same. It is arguable that the right people doing the task can not only ensure that the company profits rise, but will also allow the company’s brand to expand. Arguably, if the company had the right talents, they would have informed of the need to first market the brand to people in, for instance, India, before physically moving to the location. In turn, this would have encouraged people to interact with the offline brand (the physical stores) when they eventually became open.

Digital marketing is still growing and will continue to be an important tool in both B2C and B2B marketing. Whether a company is looking to sell directly to consumers or to sell to other companies is irrelevant when it comes to marketing in the digital era. In penetrating the Asia Pacific market, Walmart became a B2B retail store due to the fact that it has to work with a local partner. However, the US’s success has not been mirrored in other markets due to the company’s failure to resolve some of the stated challenges fully. Indeed, there are various internal plans that the marketing management has employed to help the company compete with other rivals in the new markets. The next section analyzes some of the ways the institution has transformed in an attempt to respond to the challenges discussed.

Transformation

As stated previously, numerous strategies have been put in place to help Walmart remain a competitive retail brand in its international markets. One such transformation is ensuring operational excellence in the company in an attempt to improve consumer journeys. Žarkić-Joksimović and Marinković (2018) explain that the generational theory of digital marketing forces people in the field to consider what consumer journeys mean to different cohorts of the target market. The stated theory looks into how different generations interact with brands in light of the digital era. A 20-year margin usually separates these generations for purposes of broad marketing. One significant factor about applying the theory is that consumers are viewed as a pack such that their behaviors influence one another. When perceived in this manner, marketing becomes more about either changing the target cohort’s behavior or shaping both marketing strategies and products and services to fit the behavior of the selected group.

Žarkić-Joksimović and Marinković (2018) explain that Walmart has tried to effectively change its organizational structure to allow for operational failures such as the talent gap to be addressed. Towards this end, the company has hired more technical staff who are able to fully employ needed digital marketing skills to boost the company’s international stores. It is critical that the talent gap also consider employing locals in the region. This is especially the case for the Asia Pacific bloc due to their cultures. Arguably, they are more likely to support the company that promotes their own people than one that injects foreigners into their economy. Whereas this is a critical step to take, it is pivotal that the marketing management identify the right people, such as analysts, for the job.

A second noticeable transformation is the application of some omnichannel marketing principles. It is prudent to note at this point that the company still does not encourage online shopping. However, it has streamlined its media to link its consumers from social platforms to the website. Initially, significant online engagements were done with the parent company in the US. Therefore, consumers had to interact with social media platforms and even the website of the company’s global headquarters. Today, consumers in the different regional hubs have specific social media and websites they can use. For example, the company has an active Walmart India website and social media platforms. The website has also been improved to be more user friendly and clearly highlights the company’s stores.

One advantage of this transformation is that it ensures the company customizes the consumer experience to fit the behaviors of clients within the same market. Therefore, even though a regional bloc has one headquarters, it has several digital platforms for the countries within the bloc to allow for efficient marketing of the target audience. The collective intelligence theory of digital marketing can be used to explain this concept. Baker and Saren (2016) explain that the principle suggests that people who have lived or worked and interacted with one another are more likely to have similar consumer behaviors. Therefore, they are more intelligent (as consumers) when analyzed as a group and not as individuals. Looking at Walmart’s transformation, it is arguable that the company seeks these intelligent consumers not through the larger regional blocs but via their countries. This approach narrows down the target group to a smaller but still significantly related and reliable target group.

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Thirdly, the company has also started appreciating the use of insights in fulfilling digital marketing needs. As stated previously, the need to properly analyze insights is necessitated by changing consumer behavior. The process allows the company to come up with better ways of engaging with the consumers based on the trends they follow and their general behavior online. It might be perplexing why such a digital aspect is important for a company that does not support e-commerce. Žarkić-Joksimović and Marinković (2018) explain that on numerous occasions, the same online behaviors are mirrored offline by a significant number of consumers. Additionally, the insights indicate the consumer pain points that Walmart has been using to create a better consumer experience. It is imperative to note that consumers often write about their experiences with a brand online. Therefore, to get feedback and understand some of the things that consumers go through, Walmart must keep monitoring their digital platforms.

The network theory can also be used to explain the benefit of this transformation further. The theory states that people who use digital platforms are connected; therefore, they encourage and shape each other’s online behavior (Baker & Saren, 2016). Additionally, if a user is on Facebook, there is also a high probability that he or she will be on another social media site as well. This can be a social platform handled by Facebook, such as Instagram and WhatsApp, or it can be something different such as Twitter and Groupon. Regardless, companies such as Walmart must be present in all these social platforms to further engage with clients and understand their behaviors through digital insights. Additionally, such insights will be useful in understanding where to approach each group of the target audience. This ties back to the generational theory of digital marketing. For instance, the older generations are more likely to be found on Facebook and Groupon while the mid-aged are on Twitter. On the other hand, the younger generations are more likely on Instagram and Snap Chat.

As mentioned, the transformation of Walmart in line with the digital era has also included omnichannel like Titan (Narayanan, 2020). However, the extent of implementation differs between the two companies. Titan’s approach has focused on using omnichannel to boost its e-commerce. This means that they have considered the approach both as a way of creating awareness about their brand and showing people how they can purchase their products online. Importantly, just like Walmart, the physical stores play an important role in the overall company’s strategy. Traditionally, their target audience had to visit their shops in order to acquire their products. The company has, however, realized that some of its products could be sold online and, therefore, have adopted e-commerce. For example, they have been able to record better sales of watches online compared to some of their other products. On the other hand, Walmart has adopted traditional and modern advertising principles but has still not adopted e-commerce.

Various recommendations can be made as to how Walmart can further take advantage of the digital space to increase its international sales. As explained several in the essay, e-commerce has grown over the last few decades. To fully capitalize on the benefits of the digital space, it is recommended that Walmart also considers a full integration of the omnichannel concepts. Whereas the company now only focuses on different channels for advertising, it should consider using its online platforms as direct sales points. One way this will help the company grow is that it will give its target audience the option of online shopping that many of Walmart’s competitors are also offering. In the US, Walmart had enough time to become a trusted brand. Therefore, a significant number of its clients use the brand due to loyalty and generational experience. However, the same methodology cannot apply to new markets with the current digital advancements.

A second recommendation is the proper investing in the marketing team to allow for additional technical support. As mentioned earlier, the company has started increasing the number of professionals in the marketing department to cater to the talent gap. However, more strategic effort is needed to include people who work in analytical digital marketing. This allows the team to be fully aware of the digital analytics that affect the brand and propose new ways of dealing with such. The company can deal with several of the challenges faced by incorporating a modern culture into their work environment. A shift in mindset and organizational culture often proves enough to start implementing vital changes that affect the bottom line. Ideally, the different regional hubs should be perceived as semi-autonomous such that they are allowed to deal with their different problems based on their experience in the market. This would mean a decentralization of operations to ensure regional headquarters have the authority to, for instance, explore e-commerce within their regions.

In conclusion, Walmart’s international sales have been significantly affected by the slow uptake of digital marketing concepts. Despite still recording significantly high sales in the US, the company has struggled to attract a significant percentage of their international market. In the past, the company has used traditional approaches such as working through partners to penetrate new markets. Indeed, these approaches are still relevant today in many aspects. For example, organizations seeking to put physical shops have to consider the possibility of a partnership with a local company. However, this has to be done alongside other aspects that ensure an advantage for the company. The institution’s competitive edge, its discounts, has been received poorly due to the fact that competitors also offer similar discounts. To ensure prosperity in the international markets, the company needs to adapt to digital marketing. Indeed, the company has already started taking up some corrective measures to allow for better brand positioning in the abroad markets. The efforts recorded so far can be enhanced by properly filling the talent gap the company is experiencing and efficient digital marketing management.

References

Baker, J. M., & Saren, M. (Eds.) (2016). Marketing theory: A student text. Sage Narayanan, S. (2020). Innovating in traditional retail markets. Strategy+Business. Web.

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Žarkić-Joksimović, N., & Marinković, S. (Eds.) (2018). Doing business in the digital age: Challenges, approaches, and solutions. University of Belgrade, Faculty of Organizational Sciences.

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