Arkansas based Wal-Mart (WMT, Financial) may be the world’s largest retailer in terms of physical stores, but the company is struggling massively when it comes to the digital age of shopping. Wal-Mart’s online shopping platform is not a new initiative from the retailer. In fact it’s more than a decade old plan that the retailer has failed to establish as a successful business. Though announced way back in 1999, Walmart.com is still struggling to gain ground in the e-commerce space while its biggest competitor Amazon (AMZN, Financial) is growing in leaps and bounds.
The sad tale of Wal-Mart’s e-commerce business
Over the years Wal-Mart’s e-commerce presence has surely improved, but still it’s still far away from where Amazon is today. While Amazon offers a choice of 300 million items through its online site, Wal-Mart is offering only 7 million, up 3 million from three years ago, and the figure is expected to touch 10 million by the end of 2015. Analysts and industry experts believe the company has not been consistent with its plans of expanding in the digital shopping space, and in some years it invested in e-commerce, while in some year it didn’t.
Wal-Mart has been dominating the retail space for decades and using its scale to offer better prices, it drove out smaller player from the space to become the leader. This is exactly what Amazon has also been doing, but in e-commerce. And now that Wal-Mart’s in store sales is taking a beating, the company shifting focus to e-commerce. But the retail mammoth is already decades behind Amazon – even in terms of revenue, Wal-Mart’s online sales is less than 15% of what Amazon earns yearly. Doug McMillon, Wal-Mart CEO, has been a boon for Wal-Mart and under his able leadership e-commerce is again back in the lime light.
What is the company doing to change the situation?
McMillion understands one thing – consumer preferences are changing and shoppers are buying more and more things online. In such a situation it becomes very important for a retailer to adapt itself to the new business environment. Wal-Mart’s supercenters are already feeling the pinch. The good part in all this is, the company is taking steps to improve its situation. In a recent event, in front of thousands of Wal-Mart shareholders, McMillion expressed his intentions to revive focus on e-commerce and invest heavily to develop the business. The CEO wants to take things slows, one customer at a time. According to him, Wal-Mart offers a wide range of ways through which a customer can shop with the retailer – through physical stores, through smartphones and tablets, through PCs from the convenience of their home.
With intentions of challenge Amazon, Wal-Mart has announced a new delivery program that will offer services similar to Amazon Prime. Wal-Mart’s service is named Shipping Pass and it will offer unlimited, free three-day shipping for $50 a year, as compared to Amazon’s unlimited, free two-day shipping for $99 a year. While several analysts perceive this move as a desperate attempt on Wal-Mart’s part, several are positive about the plan. Apart from this, Wal-Mart is also offering its pilot Walmart Pickup-Grocery – something similar to a drive-in where consumers can place order from their cars and pick up the items and leave.
Will it work?
Whether it will work or not depends a lot upon how Wal-Mart deals with the problems. If the company continues to invest in e-commerce with consistency and if it’s able to understand the market pulse. It surely stands a change. However, point to remember is, Amazon is an experienced player and it will take a lot for Wal-Mart to surpass the giant.
