Power Of Substitutes For Walmart

Submitted By sasa1212
Words: 518
Pages: 3

1. Porter’s five forces
Rivalry among competitors: The rivalry among competitors in this industry is extremely high. Over the past years online retail operators has increased significantly. Online stores are battling to obtain and retain customers, offering attractive discounts from the comfort of your house. Wal-marts had joined late to e-commerce and is competing to e-commerce giant like Amazon and eBay. A closer competitor is Target that already has a successful online store.
The threat of entrant: Threats of new entrant are high in this industry. Online retail store does not require maintaining a physical inventory since merchandise can be ordered once a customer has made the purchase. Regulations and costs are low compared to traditional retail industry. New online stores have access to customers globally.
The threat of substitutes: Threat of substitutes for Wal-Mart’s products is high. Since there are several online stores offering a wide variety of products with different prices, and customers ability to compare prices from anywhere, the threat of substitutes has increased greatly.
Power of suppliers: The bargaining power of suppliers is low. Wal-Mart holds a huge market share in the industry allowing Wal-mart get low prices from its suppliers. This lets Wal-mart to offer low prices in high quality products to its customers.
Power of buyers: The bargaining power of buyers is high for Wal-Marts online retail stores. Customers can browse other online retailers for the same product at a lower price. Online buyers’ population is growing fast with easy access to products reviews and discounted prices giving them more power of bargaining.

2. Wal-Mart has many resources that it can use to an effective online strategy. Harinarayan and Rajaraman have been put in charge of WalmartLabs to develop a working e-commerce. Wal-Mart wants to invest in smart phone tools and social media like Twitter to make their e-commerce site a success (Boyle & Macmillan, 2011). In addition, Wal-Mart has large financial resources that can be use to improve and develop its online services in any way. Wal-Mart also has intangible resources or goodwill which is the…