Wal-Mart is working to close gap with Amazon
HOBOKEN, N.J. — Even after an online spending spree, it may be hard for Wal-Mart to escape the Amazon in the room.
Wal-Mart’s acquisition of Jet. com and brands that appeal to younger shoppers g ave i t a n e-commerce boost as it works to close the gap between itself and the online leader. The world’s largest retailer is betting on essentials like fresh produce, and has adjusted its shipping strategy to better compete with Amazon’s Prime program. But Amazon keeps innovating too, implementing new technology and trying to make shopping more convenient.
Marc Lore, a co-founder of Jet. com who is now head of WalMart’s U.S. online operations, says he’s confident about the company’s momentum and there’s plenty of room for it to thrive.
“I can tell you we are happy with the moves we are making, and we are happy with the results,” Lore said at Jet headquarters in Hoboken, New Jersey. He noted that e-commerce sales industrywide are still growing 15 percent per year.
Lore has led Wal-Mart’s acquisitions of specialty online retailers like ModCloth, Moosejaw and ShoeBuy.com, and said he’s still looking at companies that have expertise in categories where Wal-Mart wants to grow faster.
As Wal-Mart prepares to show off some of its innovations this week before its shareholder meeting, there are signs that things are starting to click.
Sale s at Walmart .com rose 63 percent in the first quarter, up from 29 percent growth in the previous quarter and marking its fourth straight quarter of increases.
Despite its acquisitions, WalMa r t s a i d a maj o r i t y o f t h e increase was through Walmart. com and was fueled by changes in its shipping strategy and a discount for shoppers who pick up their online orders. Walmart.com now offers 50 million products including those from third-party sellers, up from 10 million a year ago. In comparison, Amazon has hundreds of millions of products.
David Spitz, CEO of e-commerce technology company ChannelAdvisor, says for some shoppers it has become ingrained that they start and finish their shopping at Amazon, and the Prime program reinforces that. He said Wal-Mart wasn’t putting a sufficient emphasis on keeping up.
“Amazon accounted for 33 percent of U.S. online sales last year, according to the research firm Euromonitor. Wal-Mart moved into second place ahead of eBay, with 7.8 percent. Greg Melich, an analyst at research firm Evercore, estimates that Amazon customers spend an average of $800 annually on the site, and members of its $99-a-year Prime program spend on average 2.7 times more than others.
If Lore is worried, he doesn’t acknowledge it.
“We don’t think specifically about Prime at all,” he said. “We think we got a customer base — those customers who want to be able to save money and they want to be able to shop in different ways, whether it be direct-tohome, grocery pickup or going to the physical store.”