With recent e-Commerce acquisitions including Jet.com, Moosejaw and ShoeBuy, Walmart has shown that it means serious business in competing with Amazon. In Q4, Walmart saw a 29% increase in e-Commerce sales on top of a 21% increase the prior quarter. These totals are a far cry from a year prior, when the company had a mere 7% e-Commerce growth that capped off five straight quarters of digital sales growth declines. Walmart also has made a significant investment in e-Commerce outside of its acquisitions, including doubling its e-Commerce distribution centers.
The RTP team discusses whether Walmart’s recent e-Commerce progress will be sustainable in the future, and whether the retail giant has come closer to figuring out how to compete with Amazon.
Debbie Hauss, Editor-in-Chief: It’s obvious that Walmart is aiming for Amazon with its recent acquisitions and other retail moves. The Moosejaw acquisition was actually quite a surprise to me, but as long as they let the brand retain its longstanding “cool” image, the deal could work out well for both companies. My overall hesitation when it comes to Walmart is that it is “Walmart.” I know plenty of consumers from a variety of generations that avoid entering a Walmart store because of concerns around treatment of employees, product sourcing and other issues. Walmart also entered and left the small-format store concept within two years, leaving a bad taste in the mouths of many small business owners and communities that lost their longstanding local businesses to Walmart when it entered their territories. I’ll be watching Walmart’s moves to improve employee morale and motivation as well as its overall image with shoppers.
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Adam Blair, Executive Editor: If there’s anyone in retail that can give Amazon a run for its money, it’s the Bentonville-based giant (although China’s Alibaba is also a strong global competitor). Walmart also seems to be doing things in the right order — acquiring Jet.com and the services of its CEO Marc Lore to revamp the mechanics of its e-Commerce operations, and then picking up niche retailers with strong identities and dedicated customer bases to round out its online offerings. I believe the challenges Walmart faces will be primarily internal. Will this highly corporate entity continue to give these acquisitions the freedom to operate in their quirky, customer-pleasing ways, while empowering them with the buying clout and immense resources that allow them to scale up? If Walmart can manage what could be a corporate clash of cultures, its e-Commerce fortunes should continue to improve.
Alicia Esposito, Content Strategist: I feel like a retailer is only as good as its people and its brand. We all know that Amazon is a go-to for nearly all consumers (myself included). If it isn’t the shopping destination, it’s an important first step during consumers’ browsing and price-comparing journey. However, even Amazon realizes that diverse product assortment and competitive pricing will only get the business so far. That’s why it has such a high R&D budget and is pushing more capital towards its fashion and footwear business. From what I can tell, Walmart is making really smart M&A investments. It’s focusing on bringing in categorically diverse, budding businesses that have been recognized for their focus on innovation, and embracing different retail business and marketing practices. As a result, Walmart is successfully expanding its business portfolio, but is also showing it has a keen eye on acquiring the right brands and talent to help the overall business evolve.
Tim Parry, Managing Editor: Walmart still has a ways to go to overtake Amazon as the top-grossing online retailer. But when is the last time someone told you they loved Amazon’s overall shopping experience? Consumers go to Amazon because they know what they want to buy and are looking for the best price, but they shop, explore, and evangelize e-Commerce sites like ShoeBuy and Moosejaw. If there’s anything we’ve learned in the retail world this past year, it’s that customers want a unique shopping experience, and that customers are still shopping off-price. Walmart can learn a lot from ShoeBuy and Moosejaw — two e-Commerce merchants that are great at telling their brand stories and creating a shopping culture — and become known as that omnichannel destination which offers the best of both worlds. When you consider that Walmart spent $3.3 billion to acquire Marc Lore’s e-Commerce brain, a combined total of just $121 million for ShoeBuy and Moosejaw is chump change. I won’t be shocked if Walmart adds more e-Commerce merchants with particular niches and cult-like followings to its stable, kind of like IBM has done to expand its footprint by acquiring successful startups.
Glenn Taylor, Senior Editor: The turnaround over the past year for Walmart’s digital sales has been nothing short of tremendous. For a brand that has dominated every facet of physical retailing, seeing it struggle to keep up with e-Commerce into 2016 was pretty jarring. But Walmart’s seemingly quick reversal of fortunes is the fruit of a combined $2 billion worth of investments in 2016 and now 2017, an asset the rest of Amazon’s competition simply doesn’t have. While Walmart revamped a lot of its e-Commerce management team with the Jet.com acquisition, the financial improvements in this area only became apparent in this most recent quarter. On a similar note, the impact of the ShoeBuy and Moosejaw acquisitions won’t be reflected in Walmart’s e-Commerce sales until 2018, so there is plenty of room for growth in these areas. I think these niche marketers will greatly help Walmart simply because the brand hasn’t traditionally focused there in the past, and it will gain a lot more insight into the interests of these particular customer bases.
Klaudia Tirico, Features Editor: While Walmart is well on its way to Amazon status — especially with its recent big-name acquisitions — I still see a big difference between both retailers that Walmart shouldn’t ignore. Walmart has the edge of providing customers with an in-store experience, yet it’s still struggling to generate customer trust due to hiccups around its workforce environment. Buying Jet.com, ShoeBuy and Moosejaw is a big and positive move, but I think the retailer should ease up on the e-Commerce initiatives and focus on improving employee morale and motivation, as Debbie said. I also believe Walmart’s acquisitions will improve its product assortment, which is crucial to success. It’s not always about price or even convenience. Retailers who are able to differentiate themselves through unique and/or exclusive product assortments, as well as an overall positive customer experience both online and in stores, could really stand out. I think Walmart knows this and is utilizing these strategies to keep up with Amazon. Only time will tell if their efforts will pay off.
