Wal-Mart Struggles to Get Up to Speed

THE WORLD'S LEADING BIG-BOX discount retailer has finally started to think big thoughts about its website. Wal-Mart has unveiled a total revamp of its site -- the first major online overhaul it has undertaken since it launched its e-commerce effort in the summer of 1996. And hot on the heels of the Jan. 1 relaunch, the company has announced a venture with a Silicon Valley VC firm to speed future development of the site.

An online store waiting three-and-a-half years to unveil a major site redesign is kind of like a brick-and-mortar shopping mall waiting a few decades to install a food court. During the past three years, nimble online retail pioneer Amazon.com has been continually evolving its site, adding shopping categories from hardware to toys, improving its shopping tools and increasing its customer base and revenues (if not its profits, which remain nonexistent); brick-and-mortar retailers such as Macy's have also been through several online design iterations. But Wal-Mart spokesperson Melissa Berryhill defends the Bentonville, Ark.-based retail giant's slower pace. "We've been more concerned about doing this right rather than doing it fast," Berryhill says.

Did Wal-Mart do it right? The new site offers roughly 600,000 products -- about six times the number of products found in a typical Wal-Mart Supercenter. The site has added several new product and service categories, including travel, photo, automotive, pets and hobbies. Shopping tools include a gift finder, personal shopping list and reminder calendar. Customers who shop online can return their merchandise in Wal-Mart's stores, a convenience that will likely be much appreciated by shoppers who've struggled with post-Christmas returns to dotcoms. And Wal-Mart is testing 60 web kiosks in its stores to help introduce its current customer base to online shopping.

That's certainly an improvement from Wal-Mart's earlier web efforts. But according to at least one analyst, the redesign still falls short in functionality and strategy. The site's search tool "doesn't work at all," says Seema Williams, a senior analyst for online retail at Forrester Research. And the site looks clunky, with a long list of categories trailing down the lefthand side of the page. "They don't seem to have a market-leading site, not even a market average site," says Williams. Strategically, Wal- Mart has yet to use its massive brick-and-mortar presence to full online advantage. Offering in-store pickup of items ordered online "would be an enormous edge, seriously one-upping all the dotcom retailers," Williams says.

Wal-Mart and its chief partner on the redesign, Cambridge Technology Partners, stress that the site will continue to evolve. "As we move forward, Wal-Mart is planning to work on this on a day-to-day basis to keep improving the site," says Srinivas Dronamraju, the client partner at Cambridge for the Wal-Mart project. And Wal-Mart's recently announced pairing with Accel Partners, a Palo Alto, Calif.-based VC firm, may help it do future updates right -- and fast. Accel and Wal-Mart have formed Wal- Mart.com Inc., an independent company that its backers hope will help speed up development of the website. The new venture will be based in Palo Alto, giving it access to hot internet talent and technology; Wal-Mart will have the majority equity interest in the company, and the board will include execs from Wal-Mart and Accel.

Clearly, with Wal-Mart's well-known brand, broad brick-and-mortar presence and low prices, it could become as formidable a pressence online as it has been in the physical world. "The opportunity for them is pretty big," Forrester's Williams says. The challenge for the new Wal-Mart.com venture will be to make sure it has the speed of a dotcom but maintains a good relationship with the mother ship so that it can continue to take advantage of Wal-Mart's volume discounts and well-oiled distribution mechanisms. Says Williams: "If Wal-Mart.com becomes too separate from the parent company, they have nothing to offer online except the brand name."

The Makeover: Who Did What

Cambridge Technology Partners was the lead systems integrator on Wal-Mart's redesign effort, which began in March of last year, according to Srinivas Dronamraju, the client partner at Cambridge for the Wal-Mart project. As would be expected on such a large site, that meant pulling together a number of pieces and partners. Grey Interactive designed the site's user interface. Hewlett-Packard supplied the Unix-based hardware as well as site architecture expertise. Broadvision supplied the content management software. Applied Graphics Technologies built Wal-Mart's photo processing site, and Quantum Leap built the travel site. Fulfillment arrangements have also been pieced together from several vendors. Some large items are drop-shipped directly from manufacturers; Fingerhut handles fulfillment of some general merchandise, Fuji handles film processing, and Books-A-Million fulfills books orders.

With all those pieces and partners, systems integration and project management were the toughest challenge of the redesign. The photo and travel websites both had to be integrated seamlessly into the general merchandise website, which in turn needed to be integrated with Wal-Mart's existing back-end systems for fulfillment and credit card authorization. Cambridge wrote C++ components to integrate the site with Wal-Mart's legacy systems.

This story, "Wal-Mart Struggles to Get Up to Speed" was originally published by CIO.

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