How Wal-Mart Is Building a Better Online Store

by Mark Friedman  on Monday, May. 13, 2013 12:00 am  

Wal-Mart’s goals for online sales are simple and audacious.

“We want to know what every product in the world is. We want to know who every person in the world is. And we want to have the ability to connect them together in a transaction,” Neil Ashe, president and CEO of Global e-Commerce for Wal-Mart, said during a May 1 Barclay’s Retail & Consumer Discretionary Conference, a transcript of which is posted on the Bentonville retailer’s corporate website.

Since 2011, Wal-Mart Stores Inc. has poured millions of dollars into its e-commerce division, and its investments are paying off.

For the current fiscal year, the first in which Wal-Mart has released online sales numbers, the company expects to have $9 billion in online sales. Although that’s only about 2 percent of its $466 billion in sales during the fiscal year that ended Jan. 31, its online sales are climbing. Its U.S.-only online sales were estimated at $6.31 billion in 2011 by the research firm Kantar Retail of Boston.

Wal-Mart’s online sales trail far behind the online retail sales king, Inc. of Seattle, which had revenue — all of it online — of $61.1 billion in 2012, up 27 percent from the previous year. Still, Wal-Mart is scooping up praise for some of its recent online initiatives.

In 2012, Wal-Mart was named the 2012 Mobile Retailer of the Year by Mobile Commerce Daily, an online newsletter that covers the mobile marketing industry. And the search function Wal-Mart created specifically for its online retail site is getting positive reviews.

Wal-Mart “is becoming more relevant in online retail and … its significant investments in this area are helping the company catch up” to Amazon, Matt Nemer, senior analyst for Wells Fargo Securities LLC, wrote in a Dec. 3 research note, “Walmart Ties Amazon on Site Search.”

In addition, Wal-Mart is tapping its 4,000 stores in the U.S. to help deliver products purchased online. The network of stores “places us in proximity to customers unlike any other retailer,” said Ravi Jariwala, a spokesman for Wal-Mart.

Using the stores as distribution centers for online shoppers, Wal-Mart has rolled out a number of programs that allow customers to order millions of items online and pick them up in stores.

“We are developing capabilities that will serve customers anytime, anywhere,” Jariwala said.

Wal-Mart’s moves are coming at a time when online sales are continuing to blossom. U.S. online retail sales are expected to reach $262 billion in 2013 and account for 8 percent of all retail sales. Online sales will continue to grow to $370 billion by 2017, when they will account for 10 percent of all retail sales, according to a March forecast report by Forrester Research Inc. of Cambridge, Mass.

A New Way to Search



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