Here is a great read from Forbes.com. Hope you enjoy it!Here is a great article and read. Hope you enjoy it!
Wal-Mart Stores WMT -1.34% and Amazon.com AMZN -0.02% are both such enormous companies that there isn’t even a fitting cliché to clumsily describe their battle for e-commerce supremacy. There isn’t a David in this fight. If Wal-Mart’s Goliath, Amazon is Godzilla.
Wal-Mart's gunning for Amazon's customers away from the cash register, online.
Both chains dominate their historic areas of expertise. Once just a bookseller, Amazon is now the biggest online store on the planet. Wal-Mart is the world’s largest retailer of any kind, its $469 billion 2012 revenues dwarfing Amazon’s $61 billion.
On the web, though, Wal-Mart lags. The Bentonville, Ark. chain doesn’t break out its U.S. online sales in its financials, but e-commerce chief Neil Ashe recently said the company aims to do $9 billion of its 2013 revenues on the internet. That’s 2% of its overall sales.
Right now, with Wal-Mart’s brick and mortar business booming, it might not matter much, but it will in five years, say experts at market research firm Nielsen.
According to Nielsen, e-commerce will gain more ground than any other segment of the retail industry by 2017, with a compound annual growth rate of 11% each year. Supercenters of the kind pioneered by Wal-Mart come in second, with their growth rate projected at only about half that of web shopping.
Wal-Mart is doing all it can to catch up with Amazon online, copycatting some of the Seattle retailer’s most successful tactics.
They’re trying out lockers, one of Amazon’s hallmarks, allowing shoppers to order items online and pick them up in stores — crucial for the Wal-Mart demographic, a quarter of whom reportedly do not use debit or credit cards or even have a bank account.
They’re dabbling in same-day delivery and even going a step further than Amazon by attempting to crowdsource package drop-off among customers. They’re investing in web technology to improve both their site’s appearance and ease of navigation.
What else can Wal-Mart possibly do to win the web? Nielsen’s Todd Hale has one answer. “E-commerce is growing at 11% a year, but sales for consumer packaged goods online — food, groceries, everyday items — are more like high double digits, almost 20%,” said Hale, SVP of consumer and shopping insights. “This is the space Wal-Mart has to go after: perishable items. That’s where they need the infrastructure.”
Today’s Wal-Mart isn’t ready to sell fruit and vegetables online. Same-day delivery is still only available in a handful of states. Its grocery hub on the web, Walmart To Go Delivery, remains in beta.
Hale believes Wal-Mart should look to smaller regional businesses like FreshDirect and PeaPod as a blueprint as it rolls out its consumer goods delivery service. And he sees the big box giant’s site as a shoo-in future destination for non-perishables like diapers as long as its infrastructure allows shoppers to set up regularly scheduled deliveries, a service popular on Diapers.com.
Amazon is already a step ahead with its Amazon Fresh same-day delivery, currently available in the Seattle area but soon headed for California. “Amazon is already building an infrastructure for perishables,” said Hale. “Groceries will be the battleground coming to the forefront.”
Kantar Research vice president of retail insights Anne Zybowski agrees to an extent, but warns that Wal-Mart must make sure its web offerings extend outside the grocery aisles.
“It’s not one item at a time, it’s who wins the entire basket or shopping cart of consumables,” she said. “A big piece of the basket is groceries, but there’s also healthy and beauty care, for example.”
Zybowski added that Wal-Mart has made significant strides online in recent months, not just in prettying up its site but making shopping easier for customers who might not want to actually pay via the internet.
“They’ve improved inventory visibility — a customer can make sure an item is in stock by checking Wal-Mart’s site, then they can go to their nearest store to buy it,” she said. “The challenge now is to get people thinking of them as a low-price leader online and off.”
Morningstar MORN -0.65% director of consumer equity research R.J. Hottovy isn’t sure Wal-Mart’s infrastructure is what’s holding up its web growth but its enormous and growing network of brick and mortar outlets — 4,000 in the U.S. and counting.
“Wal-Mart’s done an okay job online, but Amazon’s done a great job,” Hottovy said. “They can undermine the price of a lot of their competition. Without a physical storefront presence and overhead, they can pass that savings directly to consumers.”
Hottovy added that Wal-Mart will have to do more than invest in infrastructure to win the battle of the web behemoths. They’ll have to woo customers who are loyal to Amazon for good reason. “Amazon has tied up price, convenience, sales, and good customer service,” he said. “That’s a powerful combination.”
They’re trying out lockers, one of Amazon’s hallmarks, allowing shoppers to order items online and pick them up in stores — crucial for the Wal-Mart demographic, a quarter of whom reportedly do not use debit or credit cards or even have a bank account.
They’re dabbling in same-day delivery and even going a step further than Amazon by attempting to crowdsource package drop-off among customers. They’re investing in web technology to improve both their site’s appearance and ease of navigation.
What else can Wal-Mart possibly do to win the web? Nielsen’s Todd Hale has one answer. “E-commerce is growing at 11% a year, but sales for consumer packaged goods online — food, groceries, everyday items — are more like high double digits, almost 20%,” said Hale, SVP of consumer and shopping insights. “This is the space Wal-Mart has to go after: perishable items. That’s where they need the infrastructure.”
Today’s Wal-Mart isn’t ready to sell fruit and vegetables online. Same-day delivery is still only available in a handful of states. Its grocery hub on the web, Walmart To Go Delivery, remains in beta.
Hale believes Wal-Mart should look to smaller regional businesses like FreshDirect and PeaPod as a blueprint as it rolls out its consumer goods delivery service. And he sees the big box giant’s site as a shoo-in future destination for non-perishables like diapers as long as its infrastructure allows shoppers to set up regularly scheduled deliveries, a service popular on Diapers.com.
Amazon is already a step ahead with its Amazon Fresh same-day delivery, currently available in the Seattle area but soon headed for California. “Amazon is already building an infrastructure for perishables,” said Hale. “Groceries will be the battleground coming to the forefront.”
Kantar Research vice president of retail insights Anne Zybowski agrees to an extent, but warns that Wal-Mart must make sure its web offerings extend outside the grocery aisles.
“It’s not one item at a time, it’s who wins the entire basket or shopping cart of consumables,” she said. “A big piece of the basket is groceries, but there’s also healthy and beauty care, for example.”
Zybowski added that Wal-Mart has made significant strides online in recent months, not just in prettying up its site but making shopping easier for customers who might not want to actually pay via the internet.
“They’ve improved inventory visibility — a customer can make sure an item is in stock by checking Wal-Mart’s site, then they can go to their nearest store to buy it,” she said. “The challenge now is to get people thinking of them as a low-price leader online and off.”
Morningstar MORN -0.65% director of consumer equity research R.J. Hottovy isn’t sure Wal-Mart’s infrastructure is what’s holding up its web growth but its enormous and growing network of brick and mortar outlets — 4,000 in the U.S. and counting.
“Wal-Mart’s done an okay job online, but Amazon’s done a great job,” Hottovy said. “They can undermine the price of a lot of their competition. Without a physical storefront presence and overhead, they can pass that savings directly to consumers.”
Hottovy added that Wal-Mart will have to do more than invest in infrastructure to win the battle of the web behemoths. They’ll have to woo customers who are loyal to Amazon for good reason. “Amazon has tied up price, convenience, sales, and good customer service,” he said. “That’s a powerful combination.”
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