business news in context, analysis with attitude

by Kevin Coupe

Bloomberg has a story about how Walmart has come to the conclusion that if it is going to compete with Amazon and prevent it from “ruling the digital galaxy,” it needs to “forge alliances” with a vast network of partners that it believes can help it innovate faster and more effectively.

Among the entities (and their countries of origin) with which Walmart has developed relationships, or from which it has poached executives : Waymo (US), Rakuten (Japan), Microsoft (US/India), Postmates (US), Flipkart (India), Google (US), Uber (US), (China), Qualcomm (US), Square (U.S.), Rent the Runway (US), Instagram (US), Yahoo! (US), and Baidu (China).

The story notes that “historically, the massive retailer has been reluctant to cozy up with others, preferring to keep the benefits of any new venture to itself. The company’s track record with partnerships isn’t great: Walmart’s first alliances in the key markets of India and China, for instance, were eventually abandoned.” And, Bloomberg writes, “The anti-Amazon alliance won’t guarantee success against the online giant. But each member of its resistance provides something Walmart can’t do well alone.”

It is an important and Eye-Opening lesson, I think. If the world’s biggest retailer is willing to strike deals and create alliances in order to gain a competitive advantage, then it seems to me that almost anyone else ought to be willing to engage in a strategic evaluation of how networks can make the parts bigger than the whole.

It is important, however, to remember that retailers cannot give up their own identities or advantages. Retailers have to remember that the customer is theirs, and the customer experience has to be controlled by the retailer, not by some outsourced company.

You can’t forfeit your soul.
KC's View: