fbpx
BUSINESS

Walmart’s E-Commerce Business Is Battling Target and Costco as Much as Amazon

Much of Walmart’s recent e-commerce growth involves online purchases of items that are picked up at its stores, and would have otherwise been bought offline.

Is Walmart Stores Inc. (WMT – Get Report) a tougher rival to Amazon.com Inc. (AMZN – Get Report)  than it was 18 months ago? Without a doubt. But that doesn’t mean all, or even most, of the gains Wal-Mart is making in the realm of online retail are coming at Amazon’s expense.

 Indeed, so many of Walmart’s e-commerce moves — including a just-launched service for easily returning Walmart items ordered online at stores — may ultimately do more damage to bricks-and-mortar rivals with smaller online footprints and technology investments. That’s especially true for those rivals that depend heavily on sales of groceries and other low-cost consumer goods.
Walmart has been eager to tout how its online sales have soared after the company bought e-commerce startup Jet.com for $3 billion in the summer of 2017 and put Jet.com CEO and former Amazon exec Marc Lore in charge of Walmart’s U.S. e-commerce ops. The company’s U.S. e-commerce net sales and gross merchandise volume (GMV)  rose 60% and 67%, respectively, year-over-year in the July quarter, a big improvement from the 11.8% and 13% growth seen a year earlier.
The Jet.com deal, along with a string of smaller e-commerce acquisitions such as the purchase of men’s apparel retailer Bonobos and the appropriately-named Shoebuy, have helped. But as Walmart execs like to stress, improved organic growth has been the larger driver. And here, it hasn’t hurt that Walmart.com has made millions of items — two million as of January, and probably more now — available for free 2-day shipping with a $35 order minimum, and often at competitive prices.
Nonetheless, it looks as if a big chunk of this growth stems from online orders of items that would have otherwise been purchased offline — quite possibly at a Walmart store. Research firm Slice estimates 26% of Walmart’s Q2 U.S. e-commerce sales came via the fast-growing Walmart Grocery service, which provides free same-day pickup of online grocery orders at numerous stores.
 It also looks as if Walmart, which in April started providing discounts for many items available online if a shopper opts for in-store pickup, is doing brisk business selling non-grocery items that are picked up at stores. To make this process more convenient, the company has begun rolling out “Pickup Towers” inside stores that let customers grab ordered items by typing in their order number, and is experimenting with large grocery pickup kiosks that are placed outside its stores. It has also made in-store pickup available for Sam’s Club orders placed online.
To the extent that they help Walmart undercut Amazon’s pricing for online orders, the in-store pickup services threaten Amazon a bit. But it’s hard to ignore the fact that they also remove much of the convenience of traditional online shopping, by requiring a shopper to drive to a store. It’s also notable that Amazon has been busy itself setting up order-pickup lockers at convenience stores and other locales, for those preferring that option.
Source: The Street
Share your thoughts on this post
%d bloggers like this:
Visit Us On TwitterVisit Us On YoutubeVisit Us On Instagram