Retailer foresees online rev-up

E-commerce list: Wal-Mart No. 4

Sunday, December 16, 2012

— Wal-Mart Stores Inc. signaled last week that it envisions a larger role in the future for its online operation.

In an interview with Don Doctoroff, president and chief executive officer of Bloomberg LP, Mike Duke, Wal-Mart chief executive officer, said the company should have been more aggressive in the e-commerce channel.

“We should’ve moved faster,” Duke said.

Wal-Mart said at its October investor conference that it expects $9 billion globally in its e-commerce business next year. The company is No. 4 on Internet Retailer’s list of leading online retailers, trailing Amazon.com Inc., Staples Inc. and Apple Inc.

The online publication put Wal-Mart’s online sales at $4.9 billion in 2011. The Bentonville-based retailer did not respond to a request for additional information about its online operations. But online remains a small part of the company, given that it had $443.9 billion in total sales during its most recent complete fiscal year.

Dell Inc., Office Depot Inc., Liberty Interactive Corp., Sears Holding Corp., Netflix Inc. and CDW Corp., a technology solutions firm, round out the top 10.

Amazon reported $48.1 billion in online sales in 2011, Staples Inc. followed with $10.6 billion and Apple Inc. reported $6.7 billion.

In October, Wal-Mart boosted its investment in Chinese e-commerce firm Yihaodan to 51 percent.

Neil Ashe, Wal-Mart president and chief executive officer of global e-commerce, said at the analyst meeting that Wal-Mart has online operations in 10 nations, including Brazil, the United Kingdom, Canada, China and Japan.

Wal-Mart did not respond to a request for additional information about its online operations outside the United States.

Rebecca Madigan, executive director of the Performance Marketing Association, said having a strong online presence is “absolutely critical” for retailers. The not-for-profit trade associa- tion was formed in 2008 to advocate for online retailers.

“If a retailer is not online, they are missing a huge shift in consumer behavior,” she said. “Consumers are now using multiple screens to learn about products and brands.”

Those screens, she said, include smart phones as well as laptop and tablet computers. Those tools provide resources such as social media and peer consumer reviews to research any kind of product by brand or retailer.

“Retailers need to be everywhere,” she said. “Consumers aren’t necessarily thinking of online or off-line anymore.”

Camille Schuster, president of consulting firm Global Collaborations Inc. and a marketing professor at California State University in San Marcos, said shoppers have come to expect a “seamless” experience as they shop in-store or online.

“It’s critical for future success because customers now assume that if you have a store, you have a website,” she said. “You can’t really run them as a separate business anymore.”

Staples is successful in part, she said, because it has an integrated system running as one business. Wal-Mart is starting to pay more attention to that, she added.

“I think they are behind. They’re certainly not at the level of Amazon yet,” she said.

Brett Beemer, chairman and chief executive of America’s Research Group, said there is no question that the online channel is growing.

“I wouldn’t say that Wal-Mart was slow compared to other retailers, but Amazon certainly had a head start,” he said. “But nobody’s as good as Amazon on the online side.”

Nevertheless, he said, Wal-Mart isn’t likely suffering much from Amazon.

“More people walk in their door in a month than go onto Amazon in a year,” he said.

Beemer said it’s difficult for a bricks-and-mortar retailer to be an online leader as well.

Nikki Baird, managing partner of Retail Systems Research, said the after-Thanksgiving Black Friday and Cyber Monday retail events showed that online is “becoming ever more relevant,” with most sources reporting online sales up 20 percent to 30 percent and store sales that were flat or down for the weekend.

“I believe the future of stores lies more as a marketing tool, much like a catalog has evolved into,” she said. “For catalog retailers, online has basically transformed the catalog into a direct marketing campaign.”

Jeff Green, who runs consulting firm Jeff Green Partners in Phoenix, said the traditional bricks-and-mortar shopper is getting older, and the younger customers are leaning more toward e-commerce and mobile commerce. For those shoppers, he said, “you’ve got to be as cutting-edge as you can. Wal-Mart simply can’t forgo the younger customer.”

Green said Wal-Mart executives are moving in the right direction with programs such as site-to-store, in which purchases made online can be sent to the store nearest the customer for pick-up.

“It’s going to take them realizing that they have a competitive advantage to leverage ecommerce, and that’s, strangely, the bricks-and-mortar stores,” Green said.

Business, Pages 71 on 12/16/2012