Why Walmart is losing the e-commerce game
Through a special arrangement, what follows is a summary of an article from Retail Dive, an e-newsletter and website providing a 60-second bird’s eye view of the latest retail news and trends.
While Walmart is certainly investing in customer service initiatives at its physical stores, it’s spending at least that much to boost its digital efforts.
Yet Walmart reported just eight percent growth in online sales in the fourth quarter, well below Amazon.com’s 22 percent. Target’s online sales grew 34 percent, helped by its holiday-time free shipping policy.
On the face of it, it seems Walmart must do more to catch up.
Retail experts say e-commerce is necessary for Walmart or any retailer of any size, just because the industry’s center of gravity has shifted to omnichannel with consumers expecting goods to be available when and how they want to buy them.
Yet Walmart’s e-commerce operation remains highly complex and a minuscule part of its overall business. Keith Anderson, VP of strategy and insight at Profitero and a RetailWire BrainTrust panelist, told Retail Dive in an e-mail, “They sell food and non-food; run an online marketplace and a traditional e-commerce business; offer delivery and click-and-collect; and they attempt to operate across four continents with enough freedom to be locally relevant and enough standardization to be centrally manageable.”
“They’re in a tight spot because their customer doesn’t index well to e-commerce,” adds retail futurist Doug Stephens. “In order to [significantly grow online sales] they really have to change their brand and value proposition, and that could disenfranchise their core customer.”
Mr. Anderson believes Walmart may try to “out-Amazon Amazon” on the fundamentals of Amazon’s growth engine: price, selection, convenience and experience. A better move would be to leverage Walmart’s unique capabilities and assets to build a world-class omnichannel operation.
“The next few years will be critical for Walmart, which will likely need to sharpen its focus and double down on the e-commerce markets and segments best positioned for market-beating growth,” he said. “As this pressure to accelerate growth intensifies, there may be calls for Walmart to consider more acquisitions in this space.”
DISCUSSION QUESTIONS: Why is Walmart struggling to gain traction in e-commerce? Is e-commerce just a bad fit for Walmart’s size and customer profile?