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Category: Procurement and Sourcing

Supply Chain News: Hoping to Reach eCommerce Profits, Walmart Combines Buying Teams

 

Previously, US Stores and eCommerce Units Each Did their Own Thing

March 3, 2020
SCDigest Editorial Staff

A series of reports in recent months have made it clear that Walmart is now focused on ecommerce profitability, not just rapid revenue growth

Supply Chain Digest Says...

The teams will buy all of Walmart's items in that category, regardless of the channel they are sold through..

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In early January we reported on news that at a managers meeting not long before, Walmart CEO Doug McMillon stated that the company wasn't going to win by building an unprofitable ecommerce operation.

Walmart's ecommerce unit lost a massive $2 billion in its last fiscal year. And that actual loss was much larger than the projected loss for the second year in a row.

Around the same time, a former executive in Walmart's ecommerce business told the Wall Street Journal that "In the beginning it was all about growth, how can you win share away from Amazon. Now it's about profit."

So it shouldn't be any real surprise that Walmart has decided to combine its currently bifurcated approach to product sourcing.

For many years, Walmart has operated with different ecommerce and store staffs across many functions, with the store team generally based in Walmart's Bentonville, Arkansas headquarters and the ecommerce team located in offices in California or New Jersey.

The restructuring of the buyer teams was first reported recently by the Wall Street Journal, which cited people familiar with the matters as saying that Walmart is combining the two groups to decrease conflicts over the pricing of products online and in-store.

In a memo to employees, Marc Lore, who heads Walmart's dot com business, and John Furner, who runs Walmart's US store division, announced that buyers will be broken up into six merchandising teams: apparel; consumables; entertainment, toys and seasonal; food; hardlines; and home. The teams will buy all of Walmart's items in that category, regardless of the channel they are sold through.

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The consumable and food groups will begin combined buying immediately, the memo said, while the other remaining categories will merge over the next year.

Our customers see one Walmart, and they expect the same low prices and seamless experience no matter how they choose to shop with us, company spokesman Kevin Gardner said in an email to CNBC. “Today we are making changes that put the customer at the center of how we buy and sell merchandise.”

During a recent investor day, Walmart's CFO Brett Biggs said the company expects losses this year in ecommerce to be flat or slightly lower than last year.

Leaders of the six product category teams will report to Scott McCall, appointed as chief merchandising officer earlier this year.

Are ypu surprised it has taken Walmart this long to combine buying teams. Let us know your thoughts at the Feedback section below.

 

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