Gregory John Lee

Vernon Timothy Thaver

From

Walmart faces the digital music

Main area: Digital transformation & maturity
Other areas: E-commerce & e-retailing
Research to end 2024

Walmart Case 1990-2004

In this case, we explore retail giant Walmart’s digital journey in the face of unrelenting e-commerce competition.

Walmart’s Heyday as the Undisputed Retail Giant

Walmart Inc. first became the world’s biggest retailer in 1990, overtaking Sears at the time. The rapid domination thereafter was built on many factors, including Walmart’s relentlessly low pricing, their large, comprehensive and widespread stores, and a unique ability to build a worldwide supply chain that delivered the ranges and consistency of well-priced goods valued by customers. Underlying that growth was technological innovation, such as smart deployment of barcodes with associated excellence in data analytics, methods of logistic efficiency, and building a private satellite network to create seamless connectivity for its operations. By the end of the 1990s, Walmart was the world’s largest private employer, and a behemoth in retailing, holding the position in the year 2000 as the second largest Fortune 500 company (Fortune, n.d.).

The Advent of E-Commerce Competition

However, the internet era brought new competition as retail entered the new millennium, notably with the advent of Amazon. Amazon, of course, presented a digitally based, new business model for retail, with customers able to shop online, a focus on fulfillment rather than stores, and the ability to build other online services into the platform.

On the procurement front, the business model for Amazon started with the e-retailer purchasing much of its stock and holding it for sale, similar to a brick-and-mortar retailer; however, Amazon increasingly incorporated alternative and cheaper models such as holding stock on consignment and simply facilitating and fulfilling transactions between buyers and sellers (a purer platform option). Amazon was, therefore, different to Walmart in a variety of ways. Also, it wasn’t just Amazon. Other e-commerce options like eBay arose to compete with Walmart and its peers.

The growth of Amazon and e-commerce in general was slow at first, but certainly perceptible. Eventually, they and other e-retailers were cutting substantially into the market share of brick-and-mortar mainstays like Walmart. For instance, Figure 1 shows how Amazon has gradually caught Walmart in terms of retail sales revenue, presenting a larger and larger threat.

Figure 1: Walmart vs. Amazon revenue 2004-2024
Sources: Curry (2024), Dazeinfo (2022), macrotrends (n.d. a & b), Statista Research Department (2022)

In fact, Amazon’s market share of US consumer spending has transcended that of Walmart, especially since the advent of COVID-19 which stimulated e-commerce, as seen in Figure 2.

Figure 2: Walmart vs. Amazon market share of US consumer spending 2019-Q2 2024
Source: PYMNTS (2024b & d); data for Q1 2024 are not available and extrapolated

The swelling tide of e-commerce also served to create greater market concentration, with less robust brick-and-mortar players like Toys R Us, Borders, Virgin Megastores US, and many others being driven out of operation (e.g., Hadden & Reuter, 2024).

Walmart’s Digital Responses

The threat of e-retail growth persuaded Walmart to compete in the digital space. They did so in various ways.

Walmart’s Online Ordering Service

In the ongoing battle between Walmart and Amazon, each player has their advantages, and each is attempting to grow into the other’s traditional strengths.

Amazon has increasingly grown its network of physical stores and continues to do so, with purchases such as Wholefoods, its own high-tech Amazon Fresh stores, and future plans to grow a network of superstores similar to Walmart’s.

Walmart, on the other hand, continues to attempt to grow its online presence and options. First, as early as the year 2000, Walmart created a robust online ordering service that eventually included options for local delivery or collection (Walmart, n.d.-d). Walmart enjoys its massive store network, which doubles as delivery and collection hubs for these services in a way that Amazon cannot achieve to date. For instance, Repko (2022) noted that:

Walmart has 31 fulfillment centers across the U.S. — but more than 3,500 stores, or about 75% of its total locations, fulfill online orders that would be otherwise routed through a fulfillment center. What’s more, the company said it can reach 80% of the U.S. population with same-day delivery.

In digitalizing retail ordering, delivery and collection, Walmart were not so much competing in the platform business space, but rather in building the more conventional, alternative, online sales channel for their own store-provided products with delivery or collection options. This still competes with the likes of Amazon, since, from the consumer’s perspective, it remains online shopping. Walmart also dramatically strengthened its digital marketing presence. Walmart retains some advantages over Amazon in segments such as groceries and health and personal care (Del Rey, 2024), as seen in Figure 3, which it could leverage as the cornerstone of its online ordering services.

Figure 3: Walmart advantages in groceries and fuel 2019-Q2 2022
Note: F&B = Food & beverages, H&C = Healthcare & personal care
Sources: PYMNTS (2022 & 2024d), Oritz et al. (2024)

Walmart has also furthered its online delivery services, with faster delivery times and lowered costs of delivery. The company implemented an “ultra late-night delivery” option in 2024, which allows customers to receive their orders 18 hours a day from 6AM to 12AM (SupplyChain24/7, 2024). Likewise, Amazon is continuing to build up its delivery services to compete with Flipkart (PYMNTS, 2024c), reflecting Amazon’s plan to compete with Walmart’s dominance in deliveries, with Walmart offering same-day, free deliveries (PYMNTS, 2024d). According to Walmart CEO Doug McMillon, from May 2023 to May 2024, 20% of the 4.4 billion items that were shipped were delivered in under three hours, same-day deliveries grew by more than 150% in India, and one-hour delivery times increased to 55 million orders in China (Garland, 2024).

The proximity of the stores to the average consumer in the US in particular (about 90% of Americans live within 10 miles of a Walmart) make it theoretically possible to deliver by drone, a notion which was explored. Walmart partnered with DroneUp in 2021 with widespread drone delivery in mind. Forecasts suggested that drones would be used in 37 Walmart stores across 6 US States by the end of 2022 (Repko, 2022). However, Walmart had ended this partnership by early 2025. While initially successful, the concept proved difficult, with high costs and logistical barriers.

Despite this, Walmart continues to explore and invest in drone delivery systems via its partnerships with Wing and Zipline, and continues to expand its delivery network (McNabb, 2025).

However, merely creating online ordering channels does not mean that Walmart is tapping into the full power of e-retail. As noted by Deren Baker, CEO of Edge by Ascential (Redman, 2022):

Amazon has always taken advantage of its head start as a digital-first platform and has been a pioneer of almost all the growth levers associated with platform-based retail from ‘subscribe and save’ through Prime membership to the evolving media and marketing services Amazon offers to brands.

It is for reasons such as this that Walmart has seen an eroding market share – despite retaining higher revenue than Amazon for now, Walmart’s share of consumer spending by mid-2024 was 2.9% compared to 3.5% of Amazon (PYMNTS, 2024d).

Walmart as a Platform Marketplace

In addition to the more conventional online ordering channel, Walmart has also attempted to go head-to-head with Amazon in building true multi-sided platform business opportunities. For instance, Repko (2022) noted that:

Walmart hopes using its stores will woo third-party sellers, too. Independent sellers who sign up for Walmart’s third-party marketplace can pay for Walmart Fulfillment Services, a business that provides supply chain services from storage to shipping from the retailer’s warehouses. That division is led by an Amazon veteran, Jare Buckley-Cox. Walmart will soon start packing and sending third-party sellers’ goods from stores, which will make deliveries faster and more cost effective.

They began in 2009 with Walmart Marketplace, which directly linked third-party sellers to consumers on their website, but Walmart struggled to attract sellers (by 2016, Amazon boasted over two million sellers while Walmart Marketplace had only breached a thousand sellers; Moazed, n.d.).

Walmart then shifted to an acquisition strategy, buying a majority stake in Yihaodian, a Chinese e-commerce business, in 2012 (Jourdan, 2015), purchasing the general e-commerce channel Jet.com for over $3 billion in 2016 (Rubin, 2020), and outdoor specialist Moosejaw in 2017 (Malik, 2023). Walmart expanded aggressively into the promising Indian e-commerce market in 2018 with a $16 billion acquisition of Flipkart (and an increased stake of $1.4 billion in 2023; Medithi, 2023), and in 2019 partnered with kid’s subscription clothing service Kidbox (Stampler, 2019).

Walmart wound up discontinuing the Jet.com brand, finding that their own Walmart Marketplace channel had more traction. As noted in this regard by Rubin (2020):

After bringing in many new e-commerce leaders, Walmart has seen success with its main Walmart.com site, which overtook eBay as the No. 2 online retailer in the US this year, according to eMarketer. But several of its smaller brands didn’t thrive, with Walmart selling ModCloth and cutting staff at Bonobos. Jet’s online traffic has plummeted since the acquisition as Walmart has focused more on expanding Walmart.com.

In a similar vein, Walmart sold Moosejaw in 2023, presumably due to difficulties in integrating direct-to-consumer brands into its business model (Malik, 2023), and wishing to consolidate everything into its own Walmart platform.

The growth in this direct platform effort has been relatively slow; by mid-2022, Amazon retained almost 45% of the e-commerce market share, while Walmart had only reached 5.4% through its e-commerce channels, although the COVID-19 pandemic saw Walmart enjoy a 74% surge in online traffic. Despite Walmart’s attempts to compete with Amazon within the field of e-commerce, the company still fell behind Amazon (with a decline of 15% in online shoppers in its first quarter in 2024). However, it still sits above other online retailers (e.g., Temu, eBay, and Target), maintaining its position behind Amazon (Feger, 2024). While Walmart might be second best as an online retailer, its year-over-year growth in e-commerce is over three times greater than Amazon’s (27% vs. 7%) (Parton, 2024b). According to Mickey Chadha:

Walmart has done a very good job in integrating its store base to its e-commerce capabilities; a lot of its fulfillment is being done from its stores, which is really beneficial.

Walmart continues to add features that compete with Amazon to attempt to improve this; for instance, in 2020, they introduced Walmart+ to compete with Amazon Prime, where a subscription allows customers to gain unlimited free grocery delivery and other perks like discounts (McMillen, 2023). Walmart+ secured around 8 million subscribers in less than half a year. Both Amazon and Walmart continued to beef up their subscription services with new benefits, and by mid-2024, Amazon Prime was still in the lead for paid memberships (with a 67% penetration rate) with Walmart+ obtaining 30% (PYMNTS, 2024d).

Other Digital Initiatives

Reaching as much of the massive worldwide retail market is not the only focus of Walmart’s digital initiatives. They have also spent the past decades increasingly finding ways to streamline operational processes, helping them to keep costs low. This journey had already been in progress with technology elements mentioned earlier in the case, like barcode-based excellence in product tracking and analytics, their satellite network, and other initiatives. The acceleration in the 4IR era has only sped up internal digital transformation. In 2018, Walmart signed a wide-ranging partnership with Microsoft to embark on a cloud-based transformational journey. They also entered into a significant partnership with Adobe. They have deeply invested in autonomous shelf-scanning robots, floor cleaners, and unloaders. There is a pilot program to investigate autonomous vehicle uses. They have instigated virtual reality training for employees, automated scheduling, mobile in-store checkout, and many other app features such as an item finder and store maps. Cashier-less technology has been developed as part of a range of options. In all, they identify process efficiencies through digitalization as a major way to achieve their stated low-cost vision. Many other technology-led innovations have also been explored or planned.

The deep development that Walmart has put into its digital platforms has led to a further opportunity to commoditize this development. As noted by Moran (2022):

Its Adobe partnership, for example, enables Walmart to offer its cloud-based pickup, delivery and fulfillment services to retailers. This summer, Walmart also started selling its white-label delivery platform to other businesses.

In mid-2024, Walmart announced that it would be shifting from paper shelf labels to digital shelf labels, with the goal of shifting how the company manages its stores. Digital shelf labels will make adjusting prices more cost and time effective, eliminating the need to manually change paper tags (Law, 2024; Velasquez, 2024).

Generative artificial intelligence (AI) and virtual reality are also being implemented in Walmart’s shopping experience. In 2024, Walmart’s immersive shopping platform (Walmart Realm) was debuted (Walk-Morris, 2024), and beta-testing of a generative AI shopping assistant began in an attempt to improve the experiences of customers (Bertha, 2023; Law, 2024). The company has now announced a first-party data platform, Walmart Luminate (which will be known as Scintilla), which will provide shopping and inventory information to sellers and advertisers on their marketplace platform (Parton, 2024b). The information provided will give retailers an understanding of products’ journeys through their network and insights into people’s purchasing behaviors (Parton, 2024a). Mark Hardy, SVP of Walmart Data Ventures, remarked (Parton, 2024a):

What we are doing is we’re looking at how do we take Walmart’s data and create value from it, through products, through being able to drive business.

Where Walmart’s Retail Digitalization Stands

In all, Walmart’s addition of digital platforms and digital transformation has been seen as relatively successful for the company, for the primary reason that it positions Walmart for strong future e-commerce growth, continued market share, and operational streamlining, with many lessons having been learned.

In the interim, Walmart continues to evolve how they structure digital initiatives. Recently, Walmart discontinued its innovation lab, which was instrumental in dispatching retail innovations, likely in an attempt to curb costs and test their technology in different ways (PYMNTS, 2024a; Wilson, 2024); however, Walmart continues to invest in modernizing the shopping experience for its users. Anshu Bhardwaj, SVP and COO of Walmart Global Technology and Commerce Technologies, noted:

I think that AI is now allowing us to do is go from an omnichannel retailer to becoming an adaptive retailer, and adaptive retailer basically means I can intersect you at the point of your convenience to get you what you want, how you want.

Conclusion on the Walmart Case

Between these and a host of other digital initiatives, Walmart has found many useful implementations for digital transformation. They have entered into new business models, created digital products, and improved efficiency of processes. Whether they can continue to stand toe-to-toe with digital-first rivals like Amazon remains to be seen, but their energy in assimilating digital transformation stands them in good stead to do so and continues to help them maintain market share.

Challenges to the Reader: Walmart

Applying the Unified Digital Maturity Model to Walmart

Use the Armstrong and Lee Unified Digital Maturity Model to analyze how Walmart has adapted from a traditional “brick and mortar” store to a digital business and remained a giant of retail in the digital era, which has seen the emergence of digital-first competitors. You can use the summary of this model in Appendix ‎AA from p. 346.

Reflections on the challenges: Walmart

Applying the Unified Digital Maturity Model to Walmart

Walmart, a global retail giant, has long been an industry leader in leveraging technology and innovation. As the digital era progresses, Walmart’s adaptation to technological disruption reflects its journey toward digital maturity. Using Armstrong and Lee’s Unified Digital Maturity Model (UDMM; see Appendix ‎AA from p. 346), this reflection analyses how Walmart demonstrates its digital maturity through the most relevant various factors and sub-factors of the UDMM, showcasing its leadership and strategic response to evolving market dynamics.

Vision and strategy

Walmart’s leadership demonstrates a clear and transformative vision integrated into its business strategy.

The groundwork for this transformation was primarily established during CEO Mike Duke’s tenure in 2009. Duke envisioned evolving the company from one rooted in supply chain and operational excellence to an organization that is increasingly entrepreneurial, experimental, and flexible (Gomes, 2024).

During this time, Duke had stated to his shareholders that (Gomes, 2024):

With our stores and low prices, we can really take advantage of mobile technology to ensure transparency. We can combine our stores, our systems and our logistics expertise into one continuous channel to drive growth and serve the Next Generation Customers around the world. So let me be very clear — in global e-commerce, we will not just be competing; we will play to win.

Today, the company’s CEO Doug McMillon has re-emphasized adapting to digital trends while maintaining Walmart’s core value proposition of low prices. This is a critical differentiation attribute of good leadership in the digital context. As Peter Diamandis (co-founder of Singularity University) stated “when given a choice, do both!“

Walmart’s strategic initiatives, such as leveraging its store network for e-commerce fulfilment, embody its vision of becoming an adaptive retailer (Walk-Morris, 2024). This alignment of digital strategy with business goals highlights a mature approach to strategic planning.

This contrasts starkly with Sears, its then nearest competitor. Sears’ leadership failed to develop a cohesive strategy for integrating e-commerce and adapting to the digital marketplace. While Sears was an early innovator in online retail, its efforts were sporadic and lacked a unified approach. Eddie Lampert, the hedge fund billionaire who acquired Kmart and later merged it with Sears, is portrayed as having primarily viewed the acquisition as a real-estate play. His strategy focused on the value of the real estate represented by the Sears and Kmart stores, rather than investing in the retail operations themselves (Davis, 2018).

On the other hand, Target has achieved some success by focusing on niche markets and adopting a smaller scale omnichannel strategy, though it still trails Walmart in fulfilment speed and scale.

Compared to Amazon, Walmart’s strategic vision has leaned heavily on leveraging its store network as distribution hubs, enabling same-day delivery for 80% of the US population (Repko, 2022). In contrast, Amazon’s digital-first approach prioritizes a pure platform strategy, resulting in faster innovation cycles and a more extensive global reach.

Organizational culture

“Culture eats strategy for breakfast!” so says management guru Peter Drucker. Walmart’s culture promotes risk-taking, experimentation, and collaboration, exemplified by its early adoption of virtual reality (VR) training and its embrace of generative AI for customer engagement (Bertha, 2023).

An analysis of the article by Bertha (2023) allows us to glean the following culture traits of the organization that bodes well for a traditional organization seeking to be a digital business.

Table 1 summarizes these issues.

Table 1: Cultural leadership attributes of Walmart

Conversely, Sears and Target have historically lagged in fostering an innovation-driven culture, with Sears remaining rigid in its business model and Target only recently investing in digital training programs for employees (Davis, 2018; Jay, n.d.).

Amazon, in contrast, has a culture of relentless experimentation, famously tolerating high-profile failures like the Fire Phone to learn and pivot effectively. While Walmart has been more conservative in its innovation approach, this has allowed for calculated investments in technologies that align with its strategic goals.

Organization and governance

Effective organization structures have enabled Walmart to coordinate digital initiatives seamlessly. One of the key aspects that sets Walmart apart as a modern digital retailer is its ability to seamlessly integrate digital investments with its core business operations. The company’s matrix organizational structure allows for efficient management of diverse business functions, enabling swift adaptation to market changes and technological advancements (The Uni Tutor, n.d.), as summarized in Figure 4.

Figure 4: Walmart organization structure
Source: Cuofano (2024)

In 2010, Walmart strategically restructured its organization by consolidating its global eCommerce activities into a dedicated Global eCommerce Division. This division was specifically designed to align with Walmart’s overarching strategy, focusing on three primary goals:

Developing and executing a cohesive global e-commerce strategy;
Accelerating the growth of online channels worldwide; and
Creating unified technology platforms and applications for all Walmart markets (Gomes, 2024).

Walmart’s Global eCommerce Division and Walmart Fulfilment Services are complementary divisions that work together to enhance the company’s e-commerce capabilities.

Walmart Global eCommerce Division focuses on the overall strategy, growth, and operations of Walmart’s online retail business across the globe. This division is responsible for driving innovation, expanding market reach, and improving customer experience through digital channels (Gomes, 2024).

Walmart Fulfillment Services, on the other hand, is a specific service offered by Walmart that allows third-party sellers to store their inventory in Walmart’s fulfilment centers. Walmart Fulfillment Services handles picking, packing, shipping, and customer support for these sellers, providing a cost-effective and efficient solution for e-commerce logistics (Walmart, n.d.-c).

Together, these relatively new organizational structures complement each other by combining strategic oversight and operational execution to support Walmart’s broader e-commerce goals.

When it comes to governance concerning (digital) investments and oversight, Walmart’s governance framework, which includes a majority-independent Board of Directors with diverse perspectives, ensures accountability, transparency, and long-term growth (Walmart, n.d.-b).

One aspect of organization which remains to be seen is whether Walmart’s discontinuation of its innovation lab, as mentioned in the case, is a good or bad move. This was stated to decentralize innovation to the business units, but does remove an explicit and deliberate structure around innovation.

Investment and innovation architecture

Walmart’s strategic focus on investments and innovation architecture has been instrumental in advancing its digital transformation. By acquiring key e-commerce players such as Jet.com and Flipkart, Walmart has significantly expanded its presence in competitive markets, bolstering its ability to cater to diverse consumer bases globally (Medithi, 2023). Additionally, Walmart’s partnerships with technology leaders Adobe and Microsoft highlight its dedication to leveraging cutting-edge cloud-based solutions, enabling greater scalability, operational efficiency, and customer-centric innovations (Moran, 2022). This dual approach of strategic acquisitions and technology partnerships positions Walmart as a frontrunner in the digital retail landscape, blending traditional strengths with modern, innovative practices to sustain its competitive edge.

This reflection provides and discusses further insights on Walmart’s innovations in subsequent sections. There are absolutes in such changes, and time will have to tell whether Walmart has done the right thing.

Digital ethics

Digital ethics refers to the study and application of ethical principles and practices in the use of digital technologies. It encompasses a wide range of issues, including data privacy, cybersecurity, intellectual property, and the ethical implications of artificial intelligence and other digital innovations. Digital ethics seeks to ensure that technology is used in a way that respects individual rights, promotes fairness, and contributes positively to society (Véliz, 2021).

The Digital Ethics Framework created by Telkom SA SOC Limited outlines principles and best practices for ethical behavior in the digital realm, focusing on areas such as data privacy, transparency, and the ethical use of technology (Telkom SA SOC Limited, n.d.). This framework is used here to evaluate Walmart’s alignment with these ethical factors.

Table 2: Digital ethics factors and how Walmart aligns

Skills

Sir Richard Branson famously stated (Schwantes, 2024):

Clients do not come first. Employees come first. If you take care of your employees, they will take care of the clients.

Walmart has prioritized digital skills development among its workforce. VR training modules and automated scheduling tools are key initiatives aimed at enhancing employee capabilities (Bertha, 2023). By embedding digital skills across its operations, Walmart ensures a workforce prepared to navigate the complexities of a digitally transformed retail environment.

Preparing to roll out new equipment across its 4,700+ retail store locations, Walmart needed a fast, efficient, and cost-effective method to train over 2.2 million retail associates on setting up, operating, and troubleshooting the new technology without disrupting daily business operations.

This resulted in:

A 96% reduction in training time, from 8 hours to 15 minutes
A 30% increase in employee satisfaction scores
A 12.5% improvement in post-training assessment scores (on average)

As noted by Andy Trainor, Vice President of US Learning, Walmart (Strivr, n.d.):

Immersive learning allows us to recreate those situations that we can’t or don’t want to recreate at the store with customers present. Associates go through training in a real, life-like environment so they can learn from it and feel the experience of it.

Walmart has also been making significant strides in upskilling its workforce using frontline technologies. Among these innovations are the Me@Walmart and My Assistant apps, which have been instrumental in enhancing the efficiency and productivity of Walmart employees. Here are a few of the features the Me@Walmart app offers (quoting from Walmart, 2021):

- Scheduling: The app lets associates easily view their shifts up to two weeks in advance, check on their upcoming paid time off and request changes to their schedule, if needed.
- Mobile clock in: Using geofencing technology, associates can clock in with a tap of a button once they arrive at their store. This gives them another convenient option to clock in.
- Push-to-talk: Constant communication is essential for our business. Walkie talkies were one solution, but not every associate has one. Push to talk enables associates to instantly connect with one another, helping them work as a team to stay nimble and react to customers’ needs.
- Ask Sam: A voice-activated personal assistant for work, the Ask Sam feature, saves time by letting associates ask the app questions to quickly locate merchandise and get answers for customers. Associates can even look up the metrics that drive their business. This feature was previously available to some associates as a separate app but is now available to all through Me@Walmart – another example of how we’re simplifying work.

Figure 5: A store associate uses the Me@Walmart app for on the floor inventory check
Source: Walmart (2021)

Moreover, Walmart has introduced the My Assistant app, a generative AI tool designed to support employees in their routine tasks. This app helps employees generate first drafts for emails and marketing content, effectively saving time and enabling them to focus on more strategic work (Massmart, 2024). By leveraging AI technology, the My Assistant app exemplifies how cutting-edge tools can enhance employee productivity and provide them with the skills needed for future roles.

These initiatives are part of Walmart’s broader strategy to provide employees with the tools and training necessary for career growth. By embracing these technologies, Walmart is not only improving the efficiency of its current workforce but also preparing them for the evolving demands of the retail industry.

New value streams and business models

Walmart’s strategic approach to digital transformation has led to the creation of innovative business models and new digital revenue streams, setting the company apart from its competitors. The following sections discuss some of these elements.

The Walmart Marketplace

Walmart’s evolution into a platform marketplace represents a significant shift in its business model. The Walmart Marketplace connects third-party sellers with consumers, enabling new revenue streams and fostering business agility (Repko, 2022). This platform allows Walmart to offer a broader range of products without the need to manage additional inventory, reducing costs and increasing profitability. The marketplace model differentiates Walmart by leveraging its existing infrastructure and brand reputation to attract sellers and buyers, thereby enhancing its value proposition.

Drone delivery services

The expansion into drone delivery services exemplifies Walmart’s commitment to operational innovation. By partnering with companies like DroneUp, Zipline, and Flytrex, Walmart has scaled its drone delivery operations to meet customer demands for faster delivery times (McNabb, 2025). This last-mile logistics solution offers rapid and contactless delivery options, enhancing customer satisfaction and loyalty. The integration of drone technology into Walmart’s delivery network sets it apart from traditional retail delivery models and positions the company as a leader in logistics innovation.

Omnichannel retail experience

Walmart’s investment in an omnichannel retail experience is another key differentiator. The company seamlessly integrates online and offline shopping experiences, allowing customers to shop in-store, online, or through mobile apps. This approach not only enhances convenience for customers but also drives sales across multiple channels. Walmart’s use of advanced data analytics and artificial intelligence to personalize customer experiences further strengthens its competitive edge in the retail market (Loafman, 2020).

Digital health and wellness services

Walmart has expanded its digital health and wellness services, offering virtual healthcare consultations, online pharmacy services, and wellness apps. These services create new revenue streams while addressing the growing demand for accessible and affordable healthcare solutions. By leveraging its vast retail network, Walmart can provide comprehensive health services to a broad customer base, differentiating itself from other retailers (Flees, 2020).

Subscription services

The introduction of Walmart+ subscription services adds another layer to Walmart’s digital revenue streams. Walmart+ offers benefits such as unlimited free delivery, discounts on fuel, and access to exclusive deals. This subscription model not only generates recurring revenue but also enhances customer loyalty and retention.

Walmart’s strategic focus on digital business models and new revenue streams demonstrates its adaptability and commitment to innovation. By leveraging platform marketplaces, drone delivery services, an omnichannel retail experience, digital health services, and subscription models, Walmart can differentiate itself in the competitive retail landscape and continue to deliver value to its customers (Cohen, 2024).

Summary of Walmart’s e-commerce performance and digital transformation

A study by Bo (2024) examines how Walmart’s business model transformation (e-commerce in particular) has enhanced financial performance, mitigated pandemic-related challenges, and created new revenue streams. The research explores Walmart’s digital strategies, implementation effects, and financial performance outcomes.

Key Findings

The following are key findings regarding Walmart’s ability to digitally transform its new value streams and business models in the face of relentless exogenous, technological change:

E-commerce expansion: Walmart has shifted focus from traditional mass-market retail to an integrated online platform. The company has implemented “one-hour quick delivery” services and strengthened its online presence through partnerships, such as its collaboration with JD.com in China.
Supply chain enhancements: Walmart invested $400 million in satellite technology to improve inventory tracking and prevent stockouts. Automated ordering and logistics integration have further streamlined operations.
Financial performance: Walmart’s e-commerce transformation has driven growth despite economic downturns. In Q2 2023, operating revenue reached $161.6 billion (5.7% YoY increase), while net profit grew by 53% to $7.9 billion. E-commerce sales in the US surged by 24% year-over-year.
Competitive positioning: While Walmart lags Amazon (which holds 41% of the US e-commerce market share), it is the second-largest player with 6.6%. Walmart’s omnichannel strategy leverages its physical stores to reduce logistics costs, offering a competitive advantage.
Future recommendations: Walmart should continue refining its supply chain automation, improving delivery services, and integrating online and offline operations to sustain its e-commerce momentum.

Customer orientation and engagement

Walmart has consistently prioritized customer-centric strategies, leveraging digital technologies to enhance the shopping experience and foster deeper engagement. By integrating advanced data analytics, artificial intelligence (AI), and augmented reality (AR), Walmart tailors its services to meet evolving consumer needs.

We have already examined many of these and they are summarized in Table 3.

Table 3: Walmart’s digital initiatives in customer engagement

Data and analytics for better customer outcomes

As detailed in Walmart (2015), a specific and exciting area of exploration concerning customer engagement is how Walmart uses big data, machine learning and analytics to deliver on its customer orientated value proposition:

Walmart operates in a highly competitive and data-driven environment. With over 11,000 stores in 27 countries, 11 e-commerce sites, and 250 million transactions per week, Walmart possesses an immense volume of data that can be leveraged to enhance customer experience, optimize operations, and deliver cost savings (Walmart, 2015). At the heart of this effort is Walmart’s commitment to its core value proposition: “Save Money. Live Better.” By utilizing big data and advanced analytics, Walmart ensures that every business decision – from product assortment to store location – drives value for customers while maintaining operational efficiency.

Integrating data across the business

Walmart’s ability to extract actionable insights from 40 petabytes of data is central to its competitive advantage (Walmart, 2015). The company has built one of the largest in-memory computing platforms in the world, allowing it to process billions of rows of data in real time. This data infrastructure is integrated across the entire business, from merchandising to supply chain management and customer segmentation. By employing sophisticated machine learning models, econometric forecasting, and AI-driven analytics, Walmart can dynamically adjust pricing, promotions, inventory levels, and logistics strategies to maximize customer savings.

One example of this data-driven approach is assortment optimization for new stores. Before a store even opens, Walmart analyses demographic data, weather patterns, income levels, and population density to predict which products will be in highest demand. Using support vector machines and clustering algorithms, Walmart identifies the ideal product mix and pricing strategy for each new location, ensuring that customers have access to the most relevant and cost-effective products.

Optimizing pricing and inventory to reduce costs for customers

Walmart’s use of elastic net regression models and predictive analytics allows it to forecast sales trends with high accuracy. By analyzing historical sales data, competitor pricing, economic conditions, and social events, Walmart can dynamically adjust pricing in response to changing market conditions. This ensures that customers always receive competitive prices while the company minimizes the risk of overstocking or running out of key products.

A key aspect of this approach is Walmart’s ability to predict demand fluctuations. Using machine learning algorithms, Walmart continuously evaluates thousands of potential variables, including weather forecasts, local economic conditions, and major social events. This helps Walmart anticipate seasonal spikes in demand, such as increased grocery sales before a hurricane or higher electronics sales during holiday seasons. By accurately forecasting these trends, Walmart ensures adequate stock availability, preventing price surges and keeping costs low for customers.

For example, Walmart integrates real-time weather data into its analytics models to predict which products will be in high demand in specific locations. If a heatwave is forecasted in Texas, Walmart can pre-emptively stock more bottled water, air conditioners, and sunscreen in local stores, preventing shortages and price hikes. This proactive approach ensures that customers have access to affordable, essential products when they need them most.

Improving customer experience through personalization

Walmart’s data analytics capabilities also enhance the customer shopping experience by offering personalized recommendations and promotions. The Walmart Luminate platform leverages internal and external data sources to understand customer purchasing patterns and tailor shopping experiences accordingly.

For example, by analyzing a customer’s purchase history, Walmart can recommend complementary products or offer targeted discounts on frequently purchased items. A customer who regularly buys baby formula may receive discounts on diapers or baby wipes, reinforcing Walmart’s promise to provide cost savings. These insights also enable Walmart to customize in-store and online experiences, ensuring that promotions and advertisements are relevant to each shopper’s needs.

Additionally, the Walmart+ subscription service, which competes with Amazon Prime, uses analytics to enhance customer engagement. Walmart+ members receive exclusive discounts, free delivery, and fuel savings, all of which are optimized using real-time data analysis to maximize value for subscribers.

Strategic store location and supply chain optimization

Walmart’s data-driven approach extends to store location planning and supply chain management. By integrating geospatial data with economic indicators, Walmart can predict the best locations for new stores. The company considers factors such as income levels, consumer density, and regional demand patterns to determine where a new store will generate the highest customer impact at the lowest operational cost.

Moreover, Walmart’s use of automated supply chain analytics ensures that products are efficiently distributed across its global network. By monitoring real-time logistics data, Walmart can identify bottlenecks, reduce delivery times, and minimize transportation costs, further driving down prices for customers.

For instance, Walmart’s investment in cloud-based analytics and real-time tracking allows for predictive restocking, ensuring that fast-moving products are replenished before they sell out. This reduces inventory waste, optimizes shelf space, and prevents supply chain disruptions, all of which contribute to cost savings that are passed on to customers.

Walmart’s ability to leverage big data and advanced analytics has redefined how it delivers on its customer value proposition. By integrating machine learning, predictive analytics, and real-time data processing into its core business functions, Walmart can offer lower prices, better product availability, and a more personalized shopping experience.

Through assortment optimization, pricing intelligence, supply chain efficiency, and customer segmentation, Walmart ensures that every operational decision aligns with its mission to help customers save money and live better. In an increasingly data-driven world, Walmart’s ability to transform massive data volumes into actionable insights has solidified its position as the leader in affordable, customer-centric retail.

Conclusion

Walmart’s digital maturity reflects a balanced and strategic approach to leveraging technology, contrasting with the slower or more limited efforts of Sears and Target, and competing head-to-head with Amazon’s aggressive digital strategies. By focusing on core strengths, such as its physical store network and customer-centric innovations, Walmart continues to position itself as a leader in the digital retail space, successfully navigating the challenges of a rapidly evolving industry.