Retail

Walmart Getting Serious About eCommerce

Walmart is making a big push to expand its online presence.

For years, Walmart has dominated the brick-and-mortar retail sector in the U.S., with its seemingly ubiquitous and mammoth locations offering the lowest prices on just about any product a consumer might want.

But the retail giant seems increasingly uneasy to sit on the sidelines and allow Amazon and other eCommerce retailers to carve up the world of online retail.

Nope, Walmart clearly wants a (big) piece of that pie, too, as illustrated by an aggressive series of moves the company has either made recently or is rumored to be considering to drastically boost its presence as an online retailer.

First, there’s Walmart’s $3.3 billion acquisition of the online marketplace startup Jet.com, which the company finalized last week.

Walmart is hoping that Jet, which it will maintain as a separate company, can boost its online presence by giving it access to new customers (and the juicy details of its online sales data and purchasing habits).

According to data from The NPD Group, a leading market research company, only about a fifth of shoppers who shop online on Jet also shopped on Walmart.com in the past six months. Plus, according to NPD, Jet shoppers tend to be wealthier than Walmart shoppers, or even Amazon shoppers, and are most likely to have incomes greater than $150,000 annually.

The Jet deal also brought the company’s founder and CEO, Marc Lore, into Walmart’s executive team. When the deal was closed, Lore was officially brought on board as Walmart’s EVP, president and CEO of the company’s eCommerce business in the U.S. In that role, Lore will lead both Walmart.com and Jet.com, and he said he plans to quickly get to work on scaling both.

“I’ll be spending a lot of time with the team in the coming weeks and months, building on our solid foundations,” Lore said in a statement announcing the closing. “Together, we will be stronger and move even faster to reimagine the future of shopping.”

The Jet acquisition comes on the heels of Walmart’s announcement in June that it was partnering with JD.com, China’s second-largest online retailer after Alibaba, on a “strategic alliance” to better serve Chinese consumers both online and in stores.

Under that deal, Walmart agreed to unload Yihaodian, its struggling eCommerce business in China, to JD.com for 144.9 million shares of the company, or approximately 5 percent of JD.com’s total shares outstanding. JD.com now controls the Yihaodian brand, website and app, while Walmart continues to handle Yihaodian’s direct sales business and sells on Yihaodian’s online marketplace.

Much like Uber and Didi Chuxing, Walmart is hoping that JD.com can solve its China problem for it, while it reaps the benefits as an investor. Prior to the deal, Yihaodian only had a 1.5 percent share of the online retail market in China, according to research from iResearch.

And now news comes that Walmart is hovering around a serious investment in Flipkart, India’s largest online retailer. Walmart is reportedly looking to invest $1 billion into Flipkart, which was founded in 2007 by a pair of former Amazon employees, in exchange for a minority stake in the company as the Indian eTailer gears up to fend off a major challenge from Amazon.

Amazon pledged over the summer to invest about $3 billion in its Indian operations in an ambitious expansion plan.

Walmart still handily dominates the retail sector, amassing $499.4 billion in total revenue last year (Sam’s Club sales are included in that figure), compared to about $99 billion in sales for Amazon in 2015, according to The Washington Post.

But growth in Walmart’s online sales have been shrinking in recent years as Amazon gobbles up a larger share of the online retail pie. Walmart’s total online sales grew just 12 percent in 2015, compared to an increase of more than 20 percent for Amazon.

Now, Walmart appears to be doing all it can to fight back against Amazon’s growing hold on the online market.

——————————–

Latest Insights:

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. The PYMNTS Next-Gen AP Automation Tracker, is a monthly report that highlights the most recent accounts payable developments and automated solutions that are disrupting how businesses process invoices, track spending and earn rebates on transactions.

Click to comment

TRENDING RIGHT NOW

To Top