Walmart’s internal systems had more than a dozen “major incidents” in the last two months alone.
Sixteen of these major incidents occurred in the first eight weeks of the company’s fiscal year, which started on February 1, according to a de-brief memo sent by Walmart’s senior technology leaders to staffers in the department and viewed by Business Insider.
“Major incidents” are issues that interfere with business operations and impact revenue, according to a person familiar with the situation, who asked to remain anonymous so they could speak freely and whose identity BI has confirmed. An additional two major incidents occurred this past weekend, the person said.
Walmart’s global technology platform runs the retailer’s core business operations, including in-store point-of-sale systems, e-commerce, and distribution and fulfillment centers. Internal emails obtained by BI show that Walmart’s business is interrupted by issues with its global tech platform at a far more frequent rate than previously reported.
In January, a software glitch temporarily shut down cash registers at thousands of Walmart stores, some for several hours, The Wall Street Journal previously reported. A Walmart spokesperson confirmed to the Journal that the glitch resulted from an issue with the company’s internal system.
It took Walmart an average time of 63 minutes to resolve these issues, according to emails obtained by BI. The January incident was an exception, as it took Walmart 16.5 hours to fix, according to another email.
That same email said that for that entire 16.5 hours, network switches at the impacted stores were in an “unmanaged state,” meaning Walmart was not in control of the data in its network.
In a statement to BI, a Walmart spokesperson did not deny the major incidents and confirmed the term is used internally by the retailer to “ensure the highest attention so they don’t turn into customer or associate pain points.”
“Major incident does not mean something is material to our business,” the spokesperson said. “Our business is strong, our infrastructure is industry-leading, and most importantly, millions of people around the world continue to rely on us every day.”
Walmart steps up competition with Amazon
With more than 10,500 stores, Walmart is the world’s largest retailer. It generated nearly $650 billion in revenue last year, even more than Amazon’s retail revenue. Still, Walmart considers the e-commerce giant a fierce rival.
In the last decade, Walmart has increasingly invested in tech, most recently with its plans to acquire Vizio for $2.3 billion.
Last year, Walmart spent $11.8 billion on supply chain, customer-facing initiatives, and technology, according to a recent SEC filing, up from $9.2 billion the year before. It has also begun marketing itself as not just a retail company but also a formidable tech player, describing itself as a “people-led, technology-powered” company in corporate filings.
Outages can damage customer relationships
The consequences of an IT system failure at a retailer like Walmart can “run the gamut from annoyance to a catastrophic break in customer service,” said Mark Cohen, director of retail studies and adjunct professor at Columbia Business School.
Outages are also a cybersecurity concern. Incidents like Walmart’s glitch in January, when it lost control of its data, can lead to breaches by malicious actors.
“This could expose sensitive consumer information such as usernames, passwords, and credit card numbers,” said Daniel McCarthy, a data scientist and assistant professor of marketing at Emory University’s Goizueta Business School.
Walmart’s frequent outages could ultimately damage its customer relationships, even if they’re brief, said Jessica Ramírez, senior research analyst at Jane Hali and Associates.
“You can easily lose someone in that minute, and they’ll take their business somewhere else,” Ramirez said.
Retailers are at greater risk for significant outages if they don’t invest the time and resources required to make technology systems run smoothly, said Cohen.
“There is no excuse for shoddy software development, installation, and maintenance,” said Cohen. “If Walmart’s philosophy was, ‘We have zero tolerance for risk,’ then these problems would likely not occur.”
Are you a Walmart employee with information or insight to share? Contact Ellen Thomas on the secure messaging app Signal at (929)-524-6964, or email ethomas@insider.com.