The story of a nimble Internet firm eating the lunch of a
lumbering brick-and-mortar chain has become an old standby, but
Wal-Mart is hoping to reverse that trend. The big box retailer
quietly launched an online classifieds portal last month. The move
has prompted speculation that Wal-Mart might be the last, great
hope of flagging newspaper classified sections.
In the transition to online markets, large, immobile big box
stores are having trouble contending with steep price competition
and customer attrition. Many retailers have resorted to old school
mergers to stave the bleeding. But Wal-Mart — the boxiest of the
box stores — is trying to change all that.
Classifieds service Oodle.com puts the retail giant squarely
into competition with classifieds giant Craigslist. Like
Craigslist, Oodle places free classified ads online. It also
aggregates classifieds from other sites such as Craigslist and
Kiggigi.
The current setup of Wal-Mart’s site is modest, but its local
focus has established potential for local venders — including
newspapers — to build up the portal’s value. This possibility
prompted Slate’s Chadwick Matlin to wonder if the
retail giant could save the local newspaper.
Who knows? But the shift in Wal-Mart’s approach is notable, and
perhaps evidence that it has learned from past mistakes. Like many
other big box stores, Wal-Mart has a spotty track record in online
ventures. In 2006 the firm quickly shuttered its teen portal
“School Your Way,” a product-hawking MySpace alternative that
missed the point of social networking, only a year after a failed
attempt to compete with Netflix and Blockbuster in the mail order
video sector.
But Wal-Mart still has one huge advantage: its size. The
company’s website attracts 26 million visitors a month according to
comScore, putting walmart.com’s audience far closer to Craigslist’s
orbit, which attracts 30 million visitors a month, than any
newspaper conglomerate could hope for on its own.
Craigslist may be ripe for some healthy competition. When asked
about potential competition from someone like Wal-Mart in Seattle
earlier this month, Craigslist founder Craig Newmark sounded more
like an old lazy stalwart than a cutting-edge innovator.
“Our site is almost 100 percent free, so we just don’t think
about competition. It’s just a distraction,” Newmark said.
THOSE WORDS ARE in stark contrast to the philosophy of Wal-Mart CEO
Lee Scott. At the annual shareholders’ meeting this month, Scott
quoted a lesson from the retailer’s founder and patron saint Sam
Walton: “You can’t just keep doing what works one time. Everything
around you is always changing. To succeed, stay out in front of
that change.”
At the meeting, Scott acknowledged that Wal-Mart has been caught
behind the times before. Its long standing lack of a public
relations department, for instance, has hurt the company’s image
over the years, by allowing the company’s criticisms to go
unchallenged with any positive message. After encountering
sometimes severe political opposition, Wal-Mart does not want to
repeat that mistake.
Michael Bergdahl, a former Wal-Mart executive and business
“turnaround” specialist, insists that entrepreneurship is inherent
to Wal-Mart’s business model: “You have to constantly reinvent
yourself.”
In the past few years, Wal-Mart has tried to do just that.
Plagued by rumors of poor employee treatment, environmental
unconcern, and unfair business practices, Wal-Mart invested in a
public relations department and has been broadcasting any changes
in its business approach while continuing to do what it does best,
in offering deeply discounted products to consumers.
Benefiting from increased sales due to the flailing economy,
Wal-Mart has plenty of funds to help shed that negative image.
Budget focused customers have always been a staple at Wal-Mart, but
consumers who might prefer to shop at specialty retailers are
grudgingly returning for Wal-Mart’s low prices as their funds
shrink, leading to a 38 percent increase in Wal-Mart stock from its
September low.
At the end of May, the company announced that sales of U.S.
stores open at least a year rose 4.4 percent. That’s a significant
increase at a time when other retailers are struggling to stay in
the black. The company has used some of that money to increase its
employee health benefits. It has implemented a $4 prescription drug
program for generic drugs, made efforts toward reducing its carbon
footprint, and, of course, expanded its online strategy.
PUBLIC RELATIONS CONSIDERATIONS aside, Wal-Mart is proving that
it’s not content to feast on the bones of the flagging economy.
“Wal-Mart is an incredibly technology savvy company,” says Phil
Harvey, editor-in-chief at Telecom Website Light Reading. “They are
going to figure stuff out faster than other big companies. Even if
they fail, they’ll be better next time.”
Wal-Mart has always been an innovator. In 2004, it became the
first retailer to require suppliers to use RFID tags to track
merchandise. Wal-Mart’s dedication to the mostly untested process
caused many of its suppliers to balk at the additional cost they
would incur, but the tags have saved Wal-Mart millions in
restocking fees, enabled the company to track products more easily,
and streamlined the purchasing process.
Though the size of large brick-and-mortar companies often
hinders their mobility in online ventures, Wal-Mart has the benefit
of its massive bottom line to fund its experiments on the Internet.
With niche sites like Mediabistro, JournalismJobs, and Cars.com
flourishing, it is evident that there’s more room in the realm of
classifieds than newspaper ad salesmen realized 30 years ago.
Wal-Mart has yet to prove its mettle in the online atmosphere,
and its focus on sales is in stark contrast to Craigslist’s focus
on user experience. But the free access of buyers and sellers at
Oodle may signal that Wal-Mart is starting to comprehend this new
marketplace. If that’s the case, then the last generation of nimble
innovators had better stay on their toes.
