New Wal-Mart Leadership Will Challenge the E-Commerce Marketplace

walmartlogo.jpgGlobal giant Wal-Mart recently announced that they have internally promoted Greg Foran e-commerce guru and Asia-Pacific leader, to Head of their U.S. Division beginning this month. This is an interesting move when looking at the brick-and-mortar challenges Wal-Mart encountered in China, as reported on in April. In the U.S., the online Wal-Mart marketplace has lagged. This is ironic considering e-commerce companies the world over have adopted Wal-Mart distribution strategies just as brick-and-mortar retailers have taken many, many pages out of the operational innovations Wal-Mart has led: implementing one of the first CPFR systems, adopting UPC bar codes, leveraging EDI records from vendors, implementing the use of RFID, and (possibly the most famous of all) the hub-and-spoke distribution network. In Wal-Mart’s recent press release, the retailer took special care to call out Foran’s “commitment to e-commerce.” As a technology frontier observer myself, I am curious to see what e-commerce innovations and acquisitions Foran will roadmap.

American retail consumers have been consistently loyal to Wal-Mart, returning year after year for value and now consumer confidence. As a go-green six sigma techie, I can of course appreciate that, as early as 2006, Wal-Mart announced their 7 R’s of Packaging: Remove, Reduce, Reuse, Recycle, Renew, Revenue, and Read – an effort that effectively retains consumers through both philosophy and leaner packaging. Of course we also remember last year’s bump: consumers were driven back to Wal-Mart when competitor Target ignored an intrusion alert that resulted in a 46% loss in holiday revenue compared to the previous year. Strategy, culture, and execution will be critical for Foran.

Wal-Mart has always been on the edge of innovation, and I speculate that they are positioning themselves once again (albeit very delicately) as a pioneer, this time for the data-driven US consumer. Consider the end-game where Wal-Mart melds their retail-front distribution network (already loaded with Machine-to-Machine/M2M technology) with an e-commerce business model like Amazon Prime but with consumables such as groceries delivered quickly and consistently. Add to that a tightly maintained technology landscape that protects cardholder data, and an intuitive user experience. Wal-Mart may not only be the number one brick-and-mortar US retailer, but a leading contender for e-commerce frontrunner as well. An agile back-end technology infrastructure will be key to this success. Let’s not forget about how important user experience, analytics and time-to-market. On paper, Foran is the right person to do this for Wal-Mart.

Earlier this year, in the China 360 report, KPMG reported that “In China’s e-commerce 12th Five-Year Plan (2011-2015), the Chinese government’s Ministry of Industry and Information Technology unveiled policies to make China a global e-commerce leader, in line with China’s transition from an investment-heavy growth model, towards a more consumption-driven model.” For added color, almost half of all internet users make online purchases. The US online marketplace will be outspent by Asia-Pacific this year for the first time in history.