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Home / Business / From advertising to A.I, Walmart does much more than retail

From advertising to A.I, Walmart does much more than retail

You can only know Walmart as a place to stop getting milk or paper towels, maybe some other stuff, on the way home from work. But the biggest retailer in the world does much more than just sell groceries – probably many things you don't even realize.

CEO Doug McMillon says the company is on the right track to become more of a "digital company". "

It tests a New York retail laboratory using artificial intelligence. Recently, for an unexplained number, it has purchased Silicon Valley-based Polymorph labs, aimed at using startup technology to make Walmart advertising easier Small Brands ̵

1; In February, it acquired Aspectiva, a startup that looks at the client's browsing behavior, and helps make product recommendations, without revealing the cost of that deal, adding veterinary clinics to its stores and now running a webstore now, and it continues to Incubate Their Own Brands – Over the past quarter, it launched one selling home furniture, called MoDRN.

In many ways, Walmart becomes more like Amazon, as Amazon becomes more like Walmart, opening stores and trying to sell more Groceries, both companies are trying to stay in the industry, while Amazon accounts for about 50% of all e-commerce sales in the United States, Walmart comes to terms: According to eMarketer, Apple in 2018 became the third largest online store in the country, followed by Amazon and eBay. [19659002] In addition to all the work in brick and mortar, Walmart believes that it can own a larger and better advertising business that rivals the Amazon.

Last year, Amazon became the third largest advertising space in the US, just behind Google and Facebook. With more and more buyers going straight to Amazon, not Google, to launch product searches, it gives the ecommerce giant the opportunity to advertise more. When consumers are ready to buy a particular product, 74% of them go directly to Amazon to do so, according to a Feedvisor survey.

And so Walmart seems to do the same. There is a reason why it is trying to make the website more of a landing page for other well-known brands – so far it has been brought into Lord & Taylor, Fanatics and Advanced Auto Parts at Walmart.com.

"As we think of new revenue and revenue streams, we know we can do more in the advertising area," McMillon said on Thursday, when Walmart reported quarterly revenue.

At the same time, the company goes deep into technology. It is despite losing his chief technology, Jeremy King, to Pinterest. King, who joined Walmart in 2011, had overseen much of Walmart's digital strategy and also on the way up Walmart Labs, the company's technology arm. With his departure, Fiona Tan, senior vice president of customer technology, went into an "elevated role," according to Walmart.

Inside of Walmart Intelligent Retail Lab in Levittown, New York, where the dealer tests a slew for new technology.

Source: Walmart

A few weeks ago, Walmart opened an Intelligent Retail Lab, also referred to as IRL, in one of its neighbor Maket locations, which is smaller than a typical Walmart store and only sells groceries , in Levittown, New York. It completely refreshed the store, equipped with high resolution cameras, sensors and other hardware to look for ways to simplify tasks such as storage containers and inventory management. A camera that can tell how mature a banana is, for example, and alert a worker to it.

"I think what we expect to get out of the lab is tools and products … to scale across the chain," Mike Hanrahan, chief executive and founder of IRL, said in a recent interview with CNBC. "We think of this place as an AI factory … I think [artificial intelligence] will be as transformative to retail as e-commerce has been."

Hanrahan explained what is being tested in Levittown will be "transformative" in the sense that some of these tools will help Walmart – across all its stores – cut down on time spent on worldly tasks and put employees in multiple customer-facing roles , as greeting customers and answer any questions they may have while browsing. "We are very much at the beginning of this journey," he said. "We want to make sure we're on the cutting edge."

IRL was born out of Walmart's tech incubator hub Store 8, which also works on virtual reality launching Spatial and, text-to-order shopping platform Jetblack.

& # 39; Morphing as we learn & # 39;

Finally, Walmart hopes to be more of younger consumers, and Walmart has been on the spree to buy brands that were born on the internet and many of them owned specific categories, like camping gear. These efforts have been led by Marc Lore, founder of Jet.com, which Walmart also owns.

So far, Walmart has bought brands in businesses ranging from lingerie, art, to big fashion for men and women clothing.

"This strategy is morphing as we learn," said Marc Lore, head of Walmart's US ecommerce business, to reporters Thursday during a phone call after earnings. He added that the purchase of these brands is helping Walmart improve its profit margin mix, as these specialty dealers tend to sell goods at higher prices. Part of Lore's strategy, Walmart, also collaborates with digital brands. During the last quarter, Kidbox has joined forces to launch a subscription box for children's clothing, as an example.

Walmart looks forward to acting more on brands that can sell at Walmart.com, at Walmart stores and directly to consumers, on their own, Lore said. "We place greater emphasis on brands that can cut across all three channels."

Thanks to Lore and his team initiatives, Walmart's e-commerce sales grew 37% in the first quarter, where home and fashion surpassed other categories, walmart said. It was better than the net sales growth of 33% the year before, but down from a 43% increase in the holiday quarter.

Marc Lore, CEO, Walmart eCommerce

Scott Mlyn | CNBC

There has also been focus on the supply chain and delivery speed. This week, the company began rolling out the next day for online ordering on three markets in the United States, planning to reach 75% of the country before the end of the year. It is after Amazon announced on April 25 its $ 800 million spend in the second quarter to make a one-day delivery free of all paying Prime members.

Walmart did not say how much it would cost to deliver the next day's opportunity, but said that this pressure is something it has been working for a while. Inventories increased by 5.9% over the last quarter because Walmart bought extra goods to store certain satisfaction centers in preparation for the delivery roll-out today, the company said.

With all these investments, Walmart keeps quiet about exactly how much there is spending. We know it bought Jet.com for $ 3.3 billion in 2017. And to a lesser extent, the price tag for Walmart's fashion brand Eloquii brand in the fall was reported to $ 100 million. A known person had told CNBC that Walmart's acquisition of Art.com had cost about the same.

At the same time, Amazon used more than $ 13.6 billion in technology in 2018, making it the largest corporate IT company globally, according to International Data Corp.. Walmart fell in third place and spent nearly $ 12 billion last year on software, hardware, telecommunications equipment and associated crew, IDC said.

These actions, in themselves, may not be able to move the needle to Walmart, but together it shows the company hopes to do much more than sell you gardening tools or back-to-school equipment.

"Dealers need to innovate and find new profit pools," said UBS analyst Michael Lasser in a research paper. "Pivoting traditional retail business models will not be easy, but will be necessary over time."

Walmart shares were up almost 2% Thursday afternoon. The stock, which has a market value of around USD 292, has increased by 9% so far this year. By comparison, Amazon shares are up 27% this year and have a market value of around $ 939 billion.

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