Posted Date: 2/19/2008
Wal-Mart Strikes Back at Amazon to Regain Its Mojo
By Joe Skorupa
Recent moves make it clear that Wal-Mart is taking notice of Amazon's 39 percent growth rate in 2007. This comes at a time when Wal-Mart announced disappointing results for 2007 and offered guidance to investors about not meeting expectations in 2008.
To regain its mojo, Wal-Mart plans to go on the offensive with three major online initiatives, according to Brian Osborn, Walmart.com vice president of marketing. Osborn spoke to a gathering of online retail executives at last week's eTail conference in Palm Springs, California, about a vision to make Walmart.com "the most valued and visited Web site, and to make it easier for customers to shop online and offline."
Osborn's vision involves focusing on three initiatives:
- Site to Store, an online purchase and in-store pick-up program.
- Customer ratings and reviews that allow the retailer to learn about products and customer satisfaction in real time.
- Find in Store, which allows customers to determine if products are available in local stores.
"These three initiatives bring the stores together with the Web," says Osborn. "Site to Store customers are already in the stores once a week, so picking up products is a natural thing to do. Customer reviews increase velocity of purchase, click-throughs and conversion rates. And Find in Store serves customers who come to the store one week to look around and prepare to buy something on their next trip."
A fourth initiative was recently reported in The Financial Times, which noted that "Wal-Mart aims to emulate Amazon's global online expansion" by investing heavily in a "global e-commerce platform." The intent, according to the story by Jonathan Birchel on January 31, is to seize "a multi-billion dollar opportunity over the next three to five years."
Are these initiatives enough to match Amazon and contribute materially to Wal-Mart's bottom line?
Wal-Mart doesn't break out online sales figures, but industry experts estimate its revenue to be between $1.5 billion and $2 billion in 2007. Amazon's revenue was $14.8 billion in 2007. Walmart.com grew by 20 percent last year, while Amazon grew by 39 percent.
Of course, Wal-Mart is the world's largest retailer with revenue of $348 billion in 2007. But its massive revenue masks an area of weakness: net profit was flat in 2007 at $11.3 billion. AmazonÃ.‚¬™s profit doubled to $476 million.
Worth noting is that Wal-Mart's growth is largely based on opening 500 or more new stores per year, which means a large portion of year-over-year growth is due to having more units in the chain.
Although Walmart.com's initiatives are significant, they are not innovative, which is a major focus for Amazon. Recent innovations by online giant include Fulfillment by Amazon, third-party product offerings on search pages, the Amazon Prime class of customers, and an Amazon tool kit offered to developers.
Another speaker at last week's eTail conference was Larry Freed, president of the customer satisfaction firm Foresee Results, who announced that Amazon was one of the highest rated online merchants among the 40 his company tracked during the recent holiday season. Walmart.com was near the bottom.
Customer satisfaction is the foundation upon which merchants build their futures. Wal-Mart has a great deal of building to do if it wants to catch Amazon.
- Joe Skorupa
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Emerging Trends in eCommerce with Dillard's, Inc.
6/12/2012 12:00:00 PM (EST)
Moderator:
>>Joe Skorupa, Group Editor-in-Chief, RIS News
Panelists:
>>Kevin Moffitt, Director of eCommerce, Dillard's
>>Nikki Baird, Managing Partner, RSR Research
>>Jason Goldberg, Vice President, Strategy and Customer Experience, CrossView
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