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Could Walmart Become The Next Tech Giant?

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Could Walmart Become The Next Tech Giant?

Plenty of large brands have hopped on the e-commerce bandwagon, building out their own proprietary technologies to further monetize their products. But why stop there — why not monetize e-commerce itself?

That's precisely what Walmart (NYSE: WMT) is doing. The world's largest retailer announced Wednesday that it will now begin offering subscriptions to its proprietary e-commerce "technologies and capabilities" to small and midsized businesses, teaming with Adobe (NASDAQ: ADBE) to integrate its Marketplace, pickup technologies and online and in-store fulfillment into the software giant's Adobe Commerce platform.

"We've built new capabilities to serve the evolving needs of our own customers, and we have a unique opportunity to use our experience to help other businesses do the same," said John Furner, CEO of Walmart U.S. "Commercializing our technologies and capabilities helps us sustainably reinvest back into our customer value proposition."

Walmart: Software Goliath?

Does this mean Walmart is a software giant now? Maybe not, but it joins Amazon (NASDAQ: AMZN) as one of the only major retailers to sell its e-commerce tech to other businesses. In 2006, Amazon Web Services began providing cloud computing services to other brands. Over the next 15 years, the company has developed a stranglehold on the cloud computing market, its 41% share more than doubling the nearest competitor, Microsoft (NASDAQ: MSFT), as of 2020. And there's no slowdown in sight – AWS did nearly $15 billion in sales in Q2 2021, up 37% from the same period last year.

But these days every company is a tech company, and Walmart is no exception as it enters the e-commerce space to try to get a piece of Amazon's pie. With the new partnership, businesses using Adobe Commerce will be able to list items through Walmart's Marketplace, leverage its two-day fulfillment network and access in-store software to help them manage inventory at their physical locations.

"The core mission of helping people save money and live better is at the heart of every idea, including Scan & Go and checkout technologies, AI-powered smart substitutions, and pickup and delivery," said Suresh Kumar, Walmart's chief technology officer and chief development officer. "Combining Adobe's strength in powering commerce experiences with our unmatched omni-customer expertise, we can accelerate other companies' digital transformations."

Joining The Digital Revolution

The move comes as Walmart continues a digital transformation of its own. Over the years, Walmart has unveiled, among other things, a cloud-powered checkout system, mobile check-in technology, app-based checkout, and an artificial intelligence-powered substitution tool that replaces sold-out products with comparable items.

The company has seen massive success with its e-commerce business in recent years. In Q1 of 2021, Walmart reported e-commerce gains of 37%, 47% and 49% from its U.S., Sam's Club, and international segments, respectively, and in its U.S. arm, e-commerce sales have more than doubled over the past two years.

Now, after dominating e-commerce sales, Walmart is on the precipice of another burgeoning market through sales of its e-commerce technology. Per a 2020 report, the global e-commerce technology market is projected to grow at a compound annual growth rate of 12% between 2020 and 2024, adding over $5 billion in value during that period.


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"We're excited to collaborate with Walmart to help Adobe merchants expand their businesses to new channels and offer shopping experiences that increase their competitiveness and fit well with shifting consumer behaviors in an increasingly digital economy," said Anil Chakravarthy, Adobe's executive vice president and general manager of digital experience business and worldwide field operations.

Companies like Shopify (NYSE: SHOP) have long dominated the digital economy. But it could soon be time for the Walmarts and Amazons of the world to crowd out the little guy and usurp the Squarespaces and the BigCommerces – for better or for worse.

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Image by jimaro morales from Pixabay

 

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