Wal-Mart Takes on Amazon’s Online Retail Might
It’s no secret that Wal-Mart Stores (NYSE:WMT) has — or is slowly being replaced — as the big retailer on campus. Thanks to a rise in online shopping and the growing popularity of the e-commerce behemoth that is Amazon.com (NASDAQ:AMZN), Wal-Mart no longer has the tightest grip on the retail industry, and that’s a reality the company is trying to reverse. The Bentonville, Arkansas-based retailer has worked diligently to expand its brick-and-mortar stores, boost inventory, and perfect customer service, but it is also focusing on the e-commerce division of its business, as this is where Amazon surpasses it by leaps and bounds. Amazon not only has almost all of Wal-Mart’s products available on its website — it also can ship them in a faster time and free of cost for its Prime members. The speed of shipping is where Wal-Mart is now concentrating its efforts.
According to the Wall Street Journal, in a private interview at the World Economic Forum in Davos, Switzerland, Wal-Mart global e-commerce CEO Neil Ashe predicted that Wal-Mart would be able to match the e-commerce might of Amazon within two years thanks to the expansion of new warehouses across the country used to distribute online orders. Ashe says that the plan, already in progress, will augment fulfillment from existing stores and distribution centers with online-only facilities, allowing orders to be met faster and more efficiently. Ashe maintains, “This is not a side project. This is how we will be serving customers going forward.”
So far, Wal-Mart has opened a facility in Fort Worth, Texas, and one in Leigh Valley, Pennsylvania will open soon, too. Both distribution centers will be used to fulfill online orders in their regions, speeding up the process of shopping online at Wal-Mart. The retailer also expects to unveil more centers across the U.S., and work to beat Amazon on product offerings and speed of delivery. Amazon currently reigns over Wal-Mart when it comes to these defining qualities, but Wal-Mart recognizes that Amazon’s extensive network of distribution centers helps the e-retailer’s cause, and that strategy is what Wal-Mart is now trying to mirror.
The clock is ticking. Wal-Mart has a deadline for its efforts and the company’s executives recognize the need to move quickly so that it can sustain its business while meanwhile bolstering its online-only service facilities. The Arkansas-based company has already suffered quarter after quarter of poorer-than-expected earnings, and it acknowledges that time is of the essence. The Journal reports that Wal-Mart is hoping to match Amazon’s range of products and quick shipping times within about two years, and is already working quickly.
The one thing Wal-Mart has going for it that Amazon cannot match is its presence in both the online and brick-and-mortar retail spheres. Ashe points out that Wal-Mart will soon be able to mix its physical-world and online transactions in a way that Amazon cannot, and that’s a bigger advantage that some may initially recognize. Ashe gives the example of one Black Friday promotion where Walmart.com shoppers could purchase a low-cost LED television online and then pick them up in stores. The company sold more than one million of those TV units, and more customers ended up visiting stores.
So, Wal-Mart is now not only racing to keep up with Amazon, but also is working to advantageously mix its two physical-world and online businesses to eventually upset the online behemoth’s success. It’s still unclear how the match between the world’s two biggest retailers will end, but Ashe maintains via the Journal that, “Wal-Mart was the Internet before the Internet came along. Value, access, transparency and efficiency are what the Internet asks of companies to survive. And the ethos of our company is very aligned with what customers are asking us to do.”