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Walmart Merging Arkansas, Silicon Valley Teams To Speed Up New Tech

January 16, 2016, 7:56 PM UTC
Courtesy of Walmart

Walmart is betting that one fully integrated tech team is better than two for speeding up innovation in the e-commerce wars.

The world’s largest retailer operates a tech group at its headquarters in Bentonville, Ark.,that focuses on systems and applications specifically for its stores. And Wal-Mart Stores (WMT) also has a large team at its @WalmartLabs in San Bruno, Calif., in the heart of Silicon Valley, that works on building e-commerce tech aimed at helping the company fight rivals like (AMZN) and Target (TGT) as more shopping gets conducted digitally.

In a move announced in an internal memo to staff seen by Fortune, Walmart said it was merging to the two divisions to create a new unit called ‘Walmart Technology.’ In all, the group will have a staff of 8,000. Walmart pointed to the recent launch of its Walmart Pay mobile payment service as an example of the kind of collaboration between the teams that it hopes the merger will spur.

The teams’ merger echoes the growing shift in how consumers shop and shows just how important it is for Walmart to fully integrate its nearly stores with its $13 billion a year e-commerce business.

“Our customers don’t think of these as different experiences. To them, it’s just Walmart or Sam’s Club,” said Neil Ashe, head of the company’s e-commerce division, in the memo.

Though Walmart has become an e-commerce giant, the third largest retailer after Amazon and Apple, its growth rate has slowed in recent quarters: in the third quarter of the current fiscal year, Walmart’s e-commerce grew 10%, well below Amazon’s rate.

The cohesion will notably be key to helping Walmart ramp up its online grocery pick-up service better compete with Amazon’s food delivery efforts. Walmart in recent years has poured billions into e-commerce, with a view to offering customers a seamless shopping experience and get more mileage out of its thousands of stores. For instance, it allows shoppers to pick up online orders at any store, to use a shopping up to alert store workers when they are getting to a Walmart to pick up an order, and also use the merchandise inventory in its enormous fleet to speed order delivery at a time Amazon is redoubling its efforts to shorten delivery times.

Chief Information Officer Karenann Terrell and Chief Technical Officer Jeremy King will continue to lead ISD and @WalmartLabs, respectively, although both will report to Ashe as head of the combined group, the memo says.