Walmart Technology

How Walmart Uses Technology to Connect Online, Retail

• Jun 10, 2014 5:18 PM EST
 
• 2 Comments

By Michael J. Miller

I was curious about how the world's largest retailer is using new technology, so I took the chance last week to go to Bentonville, Arkansas to see Walmart's Innovation Labs and talk to the company's technology leaders. What I found was a company that is using technology in all sorts of ways, to drive efficiency within its organization and to reach its customers.

Walmart is a huge organization, with sales last year of $476 billion and about 1.3 million U.S. employees, or "associates" as the firm likes to call them. It has several different kinds of stores in the U.S., including the traditional Walmart Supercenters, Sam's Club, and an increasing number of "neighborhood markets" (grocery stores), and is testing others.

More to the point, it has been embracing technology. "It is important that we all understand the shift that has happened in technology and retail, what it means for us, and what we're doing to win," Walmart CEO Doug McMillon said at its shareholder meeting last week. "There's a lot of innovation and opportunity available to us." (The week before, he talked at the Code conference about some of what the company was doing.)

Much of Walmart's technology is split between two groups. Walmart Technology, based in Bentonville, focuses on building and managing technology for the stores themselves, while Global eCommerce, based in Silicon Valley, develops the e-commerce technologies and runs the sites.

The Silicon Valley presence is bigger than you might think. The company now has more than 2,100 employees in the Valley, including 1,000 hired in the last year. And it has made 12 technology acquisitions in the last three years. Some of these are recognizable as standalone services, such as the Vudu streaming video service. But most were done to bring in talent and capabilities that are either used within the company or as part of other products. For instance, Torbit is a website accelerator designed to make sites faster.

The eCommerce business will account for sales of about $13 billion this year, according to Neil Ashe, CEO of Walmart Global eCommerce. This accounted for about 3 percent of Walmart's sales, while general eCommerce is about 10 percent of retail as a whole. (For comparison, Amazon had revenues of about $74 billion last year.)

But Ashe said he wasn't as much interested in a pure comparison of eCommerce sites. Instead, he said, Walmart wants to "win at the intersection of physical and digital."

One example of this is a new application the firm rolled out this week, called Savings Catcher, which was tested in seven markets. The company said that more than 65 percent of Walmart customers (and 80 percent of those under the age of 35) have smartphones, and that half of Walmart smartphone users have used their devices to assist with shopping while in the store. With this application, a customer goes to a website after shopping, enters the receipt number, and Savings Catcher compares the items he or she purchased to the price in the weekly print ads of local retailers. If the items are available elsewhere for less, the customer gets a gift card with the difference.

This will feed into a larger plan for the mobile application that focuses on e-Receipts, according to Gibu Thomas, SVP mobile and digital for global eCommerce at Walmart. The idea here is to automatically collect a customer's receipts in the mobile app, so that customers can search their purchase history or pick specific items they need to stock up on. In this vision, eReciepts is a platform upon which the company can build other applications.

For instance, Thomas suggested one application could be creating a shopping basket based on regular purchases, such as groceries. Another might include a budgeting process, so people who have only a fixed amount of money to spend in the store can get just what they need and can afford. This might help customers shop more efficiently; and also means they don't have to take items out of their basket at checkout. By offering tools and recommendations to help customers stretch their money further, Thomas said, the company is playing a "long game," in that it is more concerned with customer loyalty over time than maximizing revenues in a single transaction.

Ashe noted that among the things Global eCommerce is working on is Pangaea, a global technology platform built on a service-oriented architecture that eventually will form the backbone of the company's various eCommerce offerings, which vary from country to country. This includes iOS and Android applications for smartphones and tablets, as well as desktop and mobile websites.

The group is also working a lot with "big data," including helping customers find the things they want, helping the individual sites sell "one more item," and creating improved recommendation engines.

It is also enabling some new applications, such as a test of Walmart to Go in Denver, where the company offers pickup and delivery in the Denver market. (Thus far, it has found that pickup is growing much faster than delivery, because delivery needs a time slot, with added complexity). This is currently available in 29 Walmart Supercenters, with the goal of getting customers in and out of the store in less than five minutes, Ashe said.

This is similar to a service already offered by ASDA, the company's U.K. grocery subsidiary, which is ramping "click and collect," including a process that if you order online on your way to work, it will be at your Tube (subway) station when you exit it to go home.

Overall, Ashe said the eCommerce group has two 1 million-square-foot fulfillment centers in the U.S., and is building a new one in Indiana.

Ashe said the company is running a lot of tests to determine the context a customer is in – such as whether she is on her way or at the store. Context matters, he said. The concept will be that all the stores and clubs will be geo-fenced, so that the apps can give local information when they get there. But, Ashe said, the technology is currently ahead of the consumer.

"Technology has now become the key enabler for customer service," according to Karenann Terrell, the company's Chief Information Officer. She says her goal is to become a technology company inside of the world's largest retailer

The basic architecture within Walmart is a hybrid cloud, using some of the world's largest SaaS providers but also internal applications. She said the company was a big supporter of OpenStack.

Within the company's internal operations, Suja Chandrasekaran, Chief Technology Officer of Walmart Technology, said Walmart had big data before the term was common.

She said the firm has created an "enterprise data fabric" that combines all of the data that is relevant to Walmart. In turn, this consists of 50 or so distributed data platforms, and the various applications the firm needs run on top of those platforms. In total, this represents about 30 petabytes of data and growing.

In particular, Chandrasekaran said the firm was focusing on what she called a Data Café, standing for Collaborative Analytics Facilities for Enterprise, allowing for better analytics, such as a recent focus on data visualizations for Sam's Club.

But the big goal is to improve customer engagement, whether someone is shopping online or off, throughout the process. Nearly all of this is service to the company's vision of "everyday low prices." As such, it does not offer particular coupons to individual customers, although it can promote relevant offers.

There were many specific projects the firm is working on. I was intrigued by some further off technologies such as Augmented Reality to show what furniture might look like in your home, and intelligent fixtures so the store can know how many of an item are still on display.

Technology can also help the company know what products sell more on particular days in certain kinds of stores, helping it optimize the supply chain.

In short, I saw a wide variety of technology projects from mobile applications to websites, supply chain software to pickup and delivery services. In general, the goal seems to be to use technology to improve efficiency for the company and the customer, whether online or in one of the various kinds of stores. Walmart is larger than just about any technology user, and I found the different kinds of ways it uses technology – including ecommerce sites, mobile apps, a hybrid cloud infrastructure, and an emphasis on a data fabric – to be quite intriguing.

w