Walmart pushing hard to catch Amazon in e-commerce
NEW YORK, United States (AFP) — Walmart Stores, the 800-pound gorilla of retail, is running hard to catch up in an increasingly crucial segment where it is neither the biggest nor the best: e-commerce.
The company, founded in 1962 by Sam Walton, has been gobbling up smaller and niche players in e-commerce in an effort to reach online shopping market leader, Amazon.Whether those efforts are paying off will be a focal point when Walmart Stores reports quarterly earnings tomorrow.A bit more than half of all funds spent online in the United States now goes to Amazon, according to the bank Macquarie.Part of Amazon’s success stems from its breadth of offerings, which includes the Kindle that people use for reading and the Prime service that broadcasts popular television shows, said Krista Fabregas, e-commerce staff writer at
FitSmallBusiness.com.“It’s because Amazon has been doing such a great job at injecting itself into our everyday life,” she told
AFP.“Walmart is not part of everyday life, nor is Macy’s, nor is Gap, nor the other stores. We don’t have a connection with any of them throughout the day.”
SHOPPNG SPREEWalmart has been doing some shopping of its own, in an effort to make up ground against Amazon.It spent US$3.3 billion last year to buy
Jet.com, which was started by e-commerce entrepreneur Marc Lore, whose previous company was sold to Amazon for US$550 million.Lore is now chief executive of Walmart eCommerce US, where he oversees 15,000 employees split between Silicon Valley, Boston, Omaha and Bentonville, Arkansas, where Walmart is based.His annual salary at US$237 million is 10 times that of Wal-Mart chief executive Doug McMillon.In less than five months, Lore has directed Walmart to a number of acquisitions, including
Shoebuy.com (US$70 million),
ModCloth (US$45 million) and
MooseJaw (US$51 million).Walmart is also in talks to acquire the menswear chain Bonobos for US$300 million, according to a person close to the matter.Part of Walmart’s objective is to become a go-to place online for ‘essential’ products, such as toilet paper, beauty products, groceries, holiday gifts and children’s toys.“We are focusing on the type of products that customers buy most,” said Walmart spokesman Ravi Jariwala. “We want to make sure that we have the best prices shipping to your home or offering a pickup discount.”Walmart in February scrapped a subscription delivery programme that was a rival to
Amazon Prime in favour of a guarantee of free, two-day shipping for orders of more than US$35.Under the programme, customers can also pick up orders free if they go to one of Walmart’s 4,700 US stores.
AMAZON KEEPS EDGEThese efforts may cut into Amazon’s lead in e-commerce, but overtaking Amazon appears unlikely anytime soon.“They have invested heavily on channels. It will restore growth that was necessary for survival,” said Keith Anderson of e-commerce analytics firm Profitero.“I don’t see anything that suggests that Wal-Mart would catch up to Amazon or beat Amazon, but it’s still very early,” he said.The vigour of Walmart’s online investments today contrasts with its initial reticence in e-commerce, which was due to worries that growth of online shopping would cut into sales at brick and mortar stores.Walmart also was slow to introduce platforms for individual vendors who sought a venue for goods and did not introduce such an online marketplace until 2015, long after Amazon.Hannah Donoghue, director of advisory at Planet Retail RNG, said it is still relatively early in the game as far as e-commerce goes.Amazon is “the strongest right now; they are far ahead but there are a lot of innovations underway,” Donoghue said. “I don’t think Amazon will be the only one. There will be another strong player.”For now, Wall Street is giving the edge to Amazon, valuing the technology giant at US$453 million, compared with Walmart’s US$230 million.That’s in spite of Walmart’s far greater overall revenues, which were US$485.9 billion in 2016, more than 11 times those of Amazon.