Is Walmart a Technology Company Incognito?

Josh Lawler
Nov 26 · 6 min read

Do you consider Walmart a technology company? You should. Think carefully. What is the real difference between Walmart and Amazon? Now try to imagine what things might look like in fifteen years. Now what is the difference?

Okay, the ownership of big box brick and mortar stores is an obvious answer, now and likely far into the future. That said, Walmart is making moves that may even the playing field. Indeed, Walmart has taken some lessons from Blockbuster, Circuit City and Sears; Walmart recognizes that it needs to evolve to survive. Walmart may be a surprise entrant in the race to be the most advanced consumer facing technology company.[1][2]

Walmart Canada’s Blockchain Implementation Breaks New Ground in Supply Chain Management.

Walmart Canada just announced the launch of the largest blockchain-based supply chain management system announced to date. Notably, the system includes features that track freight and process payments for 70 trucking companies delivering to more than 400 retail stores. Walmart expects that all of Walmart Canada’s third-party freight carriers will be on the network by Feb. 1, 2020. [3]

1. Walmart goes big; the scale of the project is massive.

Walmart Canada handles 853 million units of inventory per year; the amount of data being processed in these transactions will be the biggest test yet for the scalability of blockchain based supply chain solutions. Walmart plans to support its Canadian supply chain using 27 distributed nodes (some on premise, some located in the cloud) . For comparison: the IBM-Maersk partnership has 14 distributed nodes and Cisco has 12. [4]

A purist might argue that if Walmart controls all of the nodes, and that this is just a centralized system. Accordingly, Walmart’s counter-parties may not trust it enough to want to give up control of their invoices. That said, we are likely looking at the future of hybrid distributed ledger systems. The giant cloud service providers (AWS, Azure, etc.) will likely provide bespoke permissioned products which might have sufficient barriers between nodes to simulate the major benefits of a truly decentralized distributed ledger. Walmart is showing a glimpse of a likely universal future.

Photo by Marcin Jozwiak on Unsplash

2. This isn’t just a supply chain play.

Walmart is integrating payment settlement into the supply chain management process. In the $8 trillion logistics and transportation vertical, as much as $140 billion per day can be tied up in disputes or settlements between supply chain participants.[5] Disputes arise because information between supply chain participants often varies, depending on who’s in-putting data, as well as poor contract management at the outset of supplier-buyer relationships.

Walmart has more than 70 carriers and they all have different rates. To solve the problem, DLT Labs took Walmart’s paper-based contracts with its carriers and converted them into a smart contract, creating real-time, actionable data for invoice creation and terms for each carrier’s settlement process. In effect, Walmart and a carrier can together, concurrently, agree on the invoice; if the system works correctly, there is essentially no need for third party audits, eliminating a huge cost and time sink.

3. Walmart is pushing critical development of the oracle technology required for a “smart contract” to be “smart.”

At its core, Walmart Canada’s distributed supply chain creates efficiency by eliminating the need for third party services (escrow, verification, banking, etc.). As with many such systems, “smart contracts” are the underpinning. A smart contract is nothing more than a contract that takes real world data and self-executes based on pre-programmed triggering events. Since no single party can amend the smart contract, each party can be confident in the other party’s performance.

For a smart contract to function, however, there needs to be a system that obtains the necessary data from external sources and feeds it into the smart contract so that the smart contract knows what action to take. This is called electronic data interchange (EDI), often performed by systems called oracles. In the case of Walmart, the oracles will need to take information from a multitude of different inputs, which might include RF sensors, QR codes, GPS information, scales and any number of other IOT sensor devices required to verify and measure the transport of goods and performance of related services. In short, Walmart is creating some cutting-edge oracle technology.[6] Walmart expects that with its new, highly automated system it will greatly reduce the number of disputed invoices in its supply chain; currently an astronomical 50% to 75% of all invoices. [5]

4. Walmart is testing multiple distributed ledger supply chain systems.

Walmart’s global reach, both in terms of regions served and products sold, provides a distinct advantage over competitors in terms of testing blockchain supply chain solutions. Those paying attention will observe much more than supply chain systems. Walmart’s “experimentation” may be a bellwether of the future of enterprise distributed ledger systems. What works and does not work could have a massive effect on the adoption of certain existing public blockchain protocols.

For example, Walmart China announced in June that it would be adopting the VeChain protocol to create a blockchain-based platform aimed to address food safety concerns. The product, dubbed the “Walmart China Blockchain Traceability Platform” already includes 23 product lines tested and listed, with another 100 planned by the end of the year across 10 product categories including fresh meat, rice, mushrooms, cooking oil and more. By the end of next year, Walmart expects to see the fresh meat products tracked on the platform to account for 50 percent of its total sales in that category, along with 40 percent of total vegetables sales and 12.5 percent of seafood sales. [7] VeChain operates on a native token (VET) bought and sold on many main stream cryptocurrency exchanges.

If other global enterprises echo Walmart’s willingness to adopt a system that includes a public on-chain component (even if it is not actually integrated into Walmart’s enterprise system) the future will look much brighter for the survival of open permissionless use-case focused cryptocurrency projects. Anyone care to take bets on what happens to the price of VET if Walmart China adopts the system over its entire enterprise. [8]

Photo by Komal Brar on Unsplash

Maybe we need a “W” in “FANG”.

I admit that I can’t seem to make it work in a catchy way. The closest I get is “FAWNG.”[9] Notwithstanding, Walmart appears to be sneaking quietly into a tech dominant position. The future could find Walmart in the role of software licensor, generating highly scaled revenue from license of its (industry standard) DLT based supply-chain protocol. Pay close attention, global adoption of distributed ledgers may come from the most unlikely places.


[1] Please see Walmart’s Crypto Experiment article for a discussion of Walmart’s blockchain initiatives for facilitating payment transactions (and customer stickiness).

[2] Nothing in this article is intended as legal or investment advice.

[3] https://www.prnewswire.com/news-releases/walmart-canada-and-dlt-labs--launch-worlds-largest-full-production-blockchain-solution-for-industrial-application-300958198.html

[4] https://www.computerworld.com/article/3454336/walmart-launches-world-s-largest-blockchain-based-freight-and-payment-network.html

[5] https://www.computerworld.com/article/3454336/walmart-launches-world-s-largest-blockchain-based-freight-and-payment-network.html

[6] The oracle is actually a very complicated problem. Much like the transaction verification of a blockchain in which many nodes are required to validate a transaction; a smart contract cannot be trusted unless there are many oracles all confirming the factual data that triggers execution of the smart contract.

[7] https://finance.yahoo.com/news/walmart-china-teams-vechain-pwc-140100652.html

[8] The author has at times owned VET.

[9] Barely edging out “FWANG.”

[10] https://corporate.walmart.com/newsroom/2019/06/13/ibm-kpmg-merck-and-walmart-to-collaborate-as-part-of-fdas-program-to-evaluate-the-use-of-blockchain-to-protect-pharmaceutical-product-integrity

Josh Lawler

Written by

Josh Lawler is a partner at Zuber Lawler whose practice focuses on mergers & acquisitions, securities law and technology transactions.

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