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Walmart's Secret Weapon to Fight Off Amazon: The -2-

The retailer is already adding computing power to its stores to process data from new technologies such as robots that clean floors, sensors that alert staff when a freezer is too warm and systems that use cameras to visually track the pace of sales. Walmart executives think there will be excess capacity to sell, according to people familiar with the plans.

Walmart may not go through with the plan to use edge computing to generate profit, and some executives have expressed skepticism internally about pursuing the effort, said a person familiar with the situation.

The Walmart spokesman declined to comment.

In May, Walmart hired a former Google and Amazon executive as global chief technology officer, a newly created position that reports directly to Mr. McMillon. Suresh Kumar previously spent about four years at Microsoft Corp. working on cloud infrastructure.

Last year, former Walmart International CEO David Cheesewright began researching artificial intelligence and technology that might help Walmart boost profits or save money, according to people familiar with the situation.

Mr. Cheesewright met with a range of AI and other experts and led sessions for other executives to educate them on his findings. By the end, he had compiled a list of 20 ideas, including edge computing.

As another way to boost profits, Walmart is working to sell more of its vast trove of data on hundreds of millions of shoppers who buy online or use credit cards in stores, and to use that data to sell more advertising.

In February, at a conference with suppliers, executives openly discussed plans to create an advertising network that could help brands like Kellogg's and Tide target online ads based on Walmart shopper data. It was a service that Walmart had previously relied on a unit of WPP PLC to sell.

The advertising effort has had a bumpy start, according to a former executive in the Walmart Media Group. Technical snafus after the business was brought in house caused many ads that had been sold to not appear online, according to former executives familiar with the situation and executives at consumer goods companies.

Walmart's advertising business is growing, said the Walmart spokesman. "As you would expect when you're building a complete in-house media business, we're learning and iterating along the way."

Walmart.com is now working to grow faster, but more profitably. The company plans to add e-commerce warehouse capacity to have more of its products available for next day delivery, according to a person familiar with the situation. Like Amazon, Walmart also plans to invest in more capacity to offer fulfillment services and warehousing for third-party merchants -- the outside companies that list their goods on Walmart.com.

At Amazon, the majority of merchandise comes from outside sellers, who pay Amazon fees to list or ship products. That has fueled rapid growth while also causing problems, with some customers and sellers saying Amazon's marketplace is peppered with knockoffs or unsafe products.

Amazon said it prohibits the sale of counterfeit products and requires all products sold to comply with applicable laws and regulations, according to an Amazon spokeswoman. "Safety is a top priority," she said.

On an earnings conference call last month, Mr. McMillon said Walmart needed to improve profits at its e-commerce operations. The company moved several Bentonville, Ark.-based Walmart veterans into e-commerce leadership roles earlier this year, including Ashley Buchanan as chief merchant and Steve Schmitt as finance chief.

Earlier this year, Mr. Lore raised eyebrows around the office by alternately wearing two black baseball hats with white lettering reading either "innovator" or "operator," according to people familiar with the situation.

In a meeting, wearing the "operator" hat, Mr. Lore jokingly explained the hats as a way to convey to everyone that he and the team could operate the business effectively as well as push Walmart to try new tactics, according to some of the people.

Mr. Lore wore the hats a couple of times to emphasize to his team the need for dexterity on both fronts, said the Walmart spokesman.

"He was like, I'm both," said one of the people familiar with the situation. "And if you are confused look at my hat."

Write to Sarah Nassauer at sarah.nassauer@wsj.com

 

(END) Dow Jones Newswires

December 21, 2019 00:15 ET (05:15 GMT)

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