Just as Amazon Web Services is the profit center that powers many of Amazon’s other businesses, Walmart CEO Doug McMillon has been increasingly interested in expanding his company’s profit pools beyond its core retail business.
Starting Wednesday, small and medium-sized retailers will be able to acquire technology developed by Walmart that enables shoppers to purchase items online and pick them up in-store. These companies will also be able to add products to Walmart’s online marketplace with just a few clicks. To offer the suite of cloud-based services, Walmart has partnered with Adobe, which will sell the software through a subscription.
“When we started our journey, Covid had just struck,” said Anshu Bhardwaj, vice president of technology strategy and commercialization at Walmart Global Technology. “We reaped the benefits of this omnichannel journey early on.”
Walmart saw sales grow both online and in-store in the wake of the pandemic. While some other retailers have been forced to close stores to contain the spread of Covid-19, Walmart was considered a major retailer and stayed open. Some customers who wanted to limit the time they spent in stores took advantage of Walmart’s online purchase and in-store pickup. These developments accelerated the company’s e-commerce growth. The retailer’s online sales rose 79% for the fiscal year ended Jan. 29, with pickup and delivery sales up triple-digit year-over-year.
Only 7% of US retailers had the “Buy online in-store pickup” option enabled in January 2018. The pandemic accelerated that rate to 22% of retailers last month, according to the Adobe Digital Economy Index.
A significant opportunity remains. Last December, Adobe and market researcher IDC estimated the total addressable market for content and commerce software as a service to be around $ 44 billion.
For those wondering why Walmart wants its potential competitors to succeed, Bhardwaj said these smaller businesses are served anyway.
“Digitization is happening everywhere as consumers evolve,” said Bhardwaj. “There is no choice but to evolve with them.”
Walmart’s size and size, and its proximity to 90% of the US population within 10 miles of any of its stores gives it a significant advantage. Additionally, Bhardwaj said, “We really want to serve our communities, our shareholders, our stakeholders and the community better.”
She noted that about a year and a half ago, McMillon changed the language of a slide he used in presentations from “serve our shareholders” to “serve our shareholders”. Bhardwaj said it was a meeting with McMillon that fueled her idea of selling the technology Walmart developed to other retailers.
Bhardwaj has been involved in other major Walmart technology initiatives. In particular, she led the successful Scan & Go technology at Sam’s Club, which enables customers to view purchases with a smartphone while adding items to their shopping cart.
The new software business opens up a potential source of income for Walmart and fits in with its strategy of creating new businesses that serve new customers and pour profits back into the company to fund further innovation.
Neither Walmart nor Adobe publicly share expectations of how big the business opportunity could be, but Bhardwaj said, “I’ll bet my life on it,” as their current role at the retailer was created to bring their idea to life.
For Adobe, the Walmart partnership increases visibility.
“We can now offer a more holistic solution, a first-class omnichannel experience,” said Peter Sheldon, Adobe’s senior director of Commerce Strategy, in an interview. “From Adobe, [these businesses] will receive world-class e-commerce and world-class omnichannel experiences from Walmart. “
The small and medium-sized retailers will use Adobe to operate e-commerce sites, including shopping cart, search, navigation and product recommendation functions. (Walmart does not use Adobe commerce software for these functions for its own website. It has its own technology.)
Small and medium-sized businesses and retailers with annual sales of $ 1 billion or more are already using a variety of Adobe e-commerce products, including Rite Aid, Verizon, Unilever, Coca-Cola, HP, Honeywell, Trader Joe’s, and more.
Walmart provides the technology that enables staff to pick and pack online purchases, and geofencing technology staff need to know when customers will be arriving to pick up their orders.