Walmart Salaries
Salaries at Walmart have become insane. Software engineers, for example, can expect to earn as much as half a million per year. Now, such salaries aren’t too crazy at big tech companies and VC funded startups, but Walmart isn’t either of those. They’re a retailer, a legacy retailer. For perspective, the top engineers at Target earn over $200,000 less at $278,000.
At Costco, the average software engineer is barely able to cross a $100,000. This doesn’t just apply to software engineers either. For product managers, they’re offering up to $500,000. For engineering managers, they’re offering up to $600,000. Even for data scientists, they’re offering up to $400,000.
In fact, Walmart is paying so much that for certain tech job titles, they’re literally on the leaderboard for paying the highest compensation. Take Solution Architect for example. Walmart comes in as the 24th highest paying company for this position with a median of $223,000. This places them just $2,000 behind Apple and $3,000 behind Facebook.
This also places them ahead of some of the largest tech companies out there, including Cisco, Salesforce, Oracle, and Dell. We should also note that Walmart is the only retailer that makes the leaderboard other than Amazon, of course, but they’re more of a tech company than a retailer.
Walmart, on the other hand, is definitely still more of a retailer, but they’re leaning into tech more than ever. In fact, they have a full-on subsidiary called Walmart Global Tech, formerly known as Walmart Labs, with 8000 employees.
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| pic credit: Wikipedia |
Why does a retailer need this many tech employees? Well, it’s because Walmart doesn’t treat tech as an addition to their retail business, they treat tech as the basis of their retail business. But it wasn’t always like this.
In fact, for nearly 16 years, Walmart had stalled out. But since 2015, the retailer has tripled their market cap growing to a valuation of just under $400 billion making them the 19th largest company in the world. So, here’s the story of how Walmart saved their stagnating business with tech.
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WALMART THE BOOMER
Walmart The Boomer Taking a look back, Walmart’s transition into tech can be traced back to the late 1990s when Walmart was very much one of the boomers in the retail industry. By this point, they were already the largest retailers in the US and the world’s largest private employer.
In fact, Walmart still holds the title to this day with a whopping 2.3 million employees. But, while things were going great at Walmart, they were starting to see a little thorn pop up called Amazon, you may have heard of them. At first, they started off as a no-name online bookstore, but every year, they were growing by hundreds if not thousands of percent.
They were expanding into new categories all the time and it seemed like they wanted to be the Walmart of the online world. In fact, they were starting to poach a bunch of Walmart employees by luring them with sky high stock compensation. This made it easy for Amazon to steal Walmart’s world class logistics and supply chain secrets.
Usually, when an up-and-coming competitor is able to steal your employees and perform extraordinarily well, it’s usually a sign that they’re doing something that you’re not. In the case of Amazon, the X factor was obviously their online presence. So, the best idea would’ve probably been for Walmart to poach some tech employees from Amazon and double down on the online space.
In fact, this is precisely what they’ve been doing over the past several years. But back in the day, Walmart would take a boomer approach and try to bog down Amazon by suing them. While that fiasco is going on at Walmart, our story jumps over two tech entrepreneurs named Venky Harinarayan and Anand Rajaraman.
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These guys are your classic tech guys from India having both completed degrees at IIT in India and Stanford in America.
They went on to create an online company called Junglee Corporation which allowed shoppers to easily compare prices and features of various online products.
This is nothing crazy today, but back in the 1990s, this was revolutionary stuff and Jeff Bezos would take an interest in the company.
In 1998, he would buy out Junglee for 1.6 million shares of Amazon, which at the time was worth $250 million. Today, it’s worth $22 billion, so safe to say that these two had scored a pretty lucrative deal but were by no means ready to retire. Both Venky and Anand would join Amazon as high-level directors and work closely with Jeff Bezos himself.
The two could end up being instrumental in the launch of Amazon's marketplace. You may not be familiar with this brand but I’m sure you know what they do. This is part of Amazon that allows for third party sellers to list products onto Amazon.
As you know, this is basically the bread and butter of Amazon today, so it looks like Bezos definitely got his money’s worth with this duo. Now, while that’s cool and all, you’re probably wondering, what in the world do these guys have to do with Walmart? Well, these two are the ones that would create what would eventually become Walmart Global Tech.
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WALMART FEELS THE PAIN
After helping Bezos launch Walmart's Feel The Pain Amazon marketplace, our duo will help him launch Amazon Mechanical Turk. This is basically the Fiverr of the corporate world. Companies can outsource brute force work like data validation and content moderation through Amazon.
By the time Mechnical Turk came out, Venky and Anand had spent the better part of a decade at Amazon, and they started to feel that it was time to move on. They didn’t directly switch over to Walmart though. They would lean back into entrepreneurship and start another company together called Kosmix.
Kosmix was a rather niche company but it was extremely valuable for the enterprise customers that were in that niche. What did Kosmix do you ask? Well, they specialize in search engine optimization. More specifically, they aimed to transform vertical search engines into horizontal search engines.
Vertical searching is the most rudimentary type of searching. It’s when people enter a keyword and the engine searches a given database for matches. Horizontal searching, on the other hand, is more like the YouTube algorithm. It uses the keywords that you entered along with your previous searches and purchases to display the products that you would most likely buy as opposed to the products that are the closest match to the keyword that you entered.
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Again, standard stuff nowadays, but a novel concept back in the 2000s. Venky and Anand would go onto build an encyclopedia of nearly 5 million categories with hundreds and hundreds of parameters. For example, they accounted for where customers were searching from, what car they drove, what music they listen to, and even what type of cheese they like.
You can use all these parameters to display products that you would most likely be converted into sales. So, for obvious reasons, this technology was extremely valuable for retailers and they would eat it up. Kosmix would end up growing hundreds of percent per year, partnering with several organizations and even acquiring smaller companies.
So Kosmix was no doubt killing it, but the same could not be said about Walmart. Walmart wasn’t exactly doing bad, but they weren’t exactly doing well either. You see, maturity had hit Walmart like a ton of bricks and they were feeling the pain. During the 80s and 90s, Walmart had grown a ridiculous 60X putting all other retailers to shame but for 10 years now, Walmart had gone nowhere.
If the industry as a whole had stagnated, this wouldn’t be too big of a problem but e commerce was still growing exponentially and Walmart was simply missing out. They did have an online presence but compared to Amazon, this was largely a joke.
In fact, if you navigate back to their 2010 website, you’re hit with a “Adobe Flash player is no longer supported” warning. Amazon on the other hand already had a recommended section and was already evolving into its current form. Walmart clearly needed to pivot, but if they wanted to stage such a large turnaround, they needed the help of experts.
And what better experts to hire than the former Amazon directors that helped launch Amazon Marketplace and are now working on a highly valuable search engine? And with that, Walmart would acquire Kosmix for $300 million in cash in early 2011.
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WALMART PIVOTS
It’s easy to say that Walmart just bought their way into tech but that’s not really the case. Yes, they had a lot of help from Kosmix but Walmart deserves a bunch of credit as well. Usually with acquisitions, companies try to integrate the child company into the parent company. They want the child company to adopt the same culture, the same philosophies, the same salary bands, and so on.
Walmart, on the other hand, decided to take a much different approach. They could clearly tell that what they were already doing wasn’t working. So it doesn't make a whole lot of sense to force this up and coming company to also do the same thing.
Instead, they would decide to adapt Walmart to what Kosmix was doing. This takes an insane amount of humility and most companies would never make such a pivot but Walmart did. While all of their peers were paying legacy company tech salaries like AT&T and IBM, Walmart was paying FAANG level salaries or atleast as close as they could get.
Obviously, they would never be able to pay as much as actual tech companies as they simply don’t have the same margins. But, for a physical retailer, they were paying extraordinary amounts. This allowed them to recruit some of the best talent out there including a bunch of Amazon employees who were trying to escape the toxic work culture at Amazon.
Suddenly, Walmart had all the resources they needed to build a modern online platform and that’s exactly what they would do. But, they didn’t just blindly copy Amazon. They did indeed add their own twist. One of the biggest bottlenecks for Amazon is their fulfillment centers. To continue driving down delivery times, Amazon has kept opening up fulfillment centers that are increasingly omnipresent.
If you want to deliver within 24 hours to any address, you need fulfillment centers within 24 hours of every address. That’s kind of how that works. But, the problem with opening so many fulfillment centers is that you quickly reach the point of diminishing returns.
Opening more centers becomes more expensive than its worth, but if you wanna keep driving down delivery times to 2 hours and 1 hour, that’s the only way. But see, this isn’t nearly as big of an issue for Walmart because, well, they’re already omnipresent, at least within the US.
In fact, the average American lives within 4.2 miles of a Walmart. So, forget 1 hour delivery, Walmart could do 15 minute delivery. All they needed to do was convert their thousands of stores into high tech warehouses, and that’s exactly what they’ve been doing.
Walmart Global Tech could handle all of the AI and machine learning involved in running such a large retail operation. What products needed to be carried by which stores and when. What routes do their trucks need to make to ensure that every store has what they need and so on and so forth.
Meanwhile, Walmart’s legacy business could focus on logistics, fulfillment, and customer satisfaction. This strategy was already working out well in the 2010s, but the pandemic changed things up big time. You see, Walmart had one thing that Amazon is still struggling to offer: fresh groceries for pick up and delivery. And this was exactly the advantage Walmart needed to cement themselves as an ecommerce juggernaut.
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THE TECH WALMART:
Today, The Tech Walmart Walmart has been able to regain the momentum that they had lost in the 2000s. Over the past 7 years, their stock has tripled and their fundamentals have led the way. In fact, Walmart is the number one revenue driver in the entire world pulling in a crazy $600 billion per year.
Now, I do want to note that their earnings have not kept up with their revenue growth but this isn’t really a concern. The main reason for this is simply that Walmart has been investing much of their profits into the tech side of the business and revenue growth.
And for modern companies, growth is simply way more valuable than the bottom line. Amazon for example is still not profitable but they’re worth over a trillion dollars. So, it looks like Walmart has not only adapted to modern tech but they’ve adapted to the modern business landscape.
And that is why Walmart is so successful to this day. Did you realize how much Walmart was paying their tech workers? Comment that down below.
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