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Conventional wisdom holds that to succeed in electronic commerce, you have to get in early

Economics

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Conventional wisdom holds that to succeed in electronic commerce, you have to get in early. But
in late 1999, Walmart decided to challenge that most sacred of web rules. After several years of
tinkering with its website, watching while others broke new Internet ground, the retailing giant
was ready to flex some cyber muscle. Up to that point, Walmart.com had realized modest
success online, ranking 43rd among Internet shopping sites. It trailed web pioneers like eBay and
Buy.com. In May 1999, Amazon.com greeted almost 10 million online visitors; Walmart.com saw
only 801,000. For 1999, analysts expected Walmart’s e-commerce activities to produce sales of
less than $50 million out of the company’s total sales of $157 billion.
Walmart faced increasing direct competition from Amazon.com. In July 1999, Amazon
announced its expansion from books, music, and videos into toys and consumer electronics.
Walmart already was a powerhouse in these product categories through its traditional stores. It
announced that it would offer products from all 25 categories carried in a typical Walmart
discount store. Moreover, it expected to offer a broader array of higher-priced items than its
traditional stores—for instance, DVD players and digital cameras. It also enabled customers to
return products ordered online to any of Walmart’s 2,451 U.S. discount stores. Like Amazon, it
planned to provide tailored online specials to match the shopping habits of its repeat customers.
The company announced plans to expand its online store offerings before the end of 1999 to
match more closely the breadth of its traditional outlets. To facilitate this expansion, Walmart
penned deals with Fingerhut Business Services and Books-a-Million. Both had expertise in
distributing individual orders directly to customers’ homes—quite a different set of skills from bulk
shipments, which had been Walmart’s forte.
Demographic shifts occurring in cyberspace offered the potential to help Walmart. Back in 1999
Jupiter Communication projected e-retailing to grow from approximately $12 billion in 1999 to an
estimated $41 billion in 2002. Much of this expansion would be concentrated in Walmart’s
existing lower- and middle-class customer base. Jupiter analyst Kenneth R. Gasser noted,
“Internet users are increasingly coming to resemble the population at large.”
By 2005,Walmart.com had logged $1 billion of Internet sales. However, the world’s largest
retailer only ranked about 13th in Internet sales while Amazon.com had sales of over $10 billion.
About 500 million total visitors clicked on Walmart.com in 2005, and the company predicted this
to increase to 700 million in 2006. But, its online sales still only accounted for about 1 percent of
Walmart’s annual sales.
In January 2007, Walmart.com launched Soundcheck, an original series of musical performances
that feature punk pop and rock bands to increase its digital music offerings. In March 2007,
Walmart.com announced “Site to Store” where Walmart.com shoppers can purchase online and
have orders delivered to their local store for free. By July, Site to Store sales more than doubled
since its March rollout, and about 90 percent of participating stores had at least one Site to Store
order within the first 48 hours of service activation. In January 2008, only 11 months after
initiating its movie download service, Walmart.com quietly dropped this service because HewlettPackard Co. stopped providing the application that allowed shoppers to purchase and download videos such as movies and TV shows.

Placing yourself back in 1999, answer the following questions in a well-developed discussion:

1) In November 2007, Walmart.com announced that it wants to be “the most visited, most valued online retail site.“Suppose you were hired by an outside consulting firm to evaluate Walmart.com’s potential to achieve this goal. Write a short report listing those factors that will enhance and those factors that will impede Walmart.com’s ability to achieve the goal of “the most visited, most valued online retail site.”