With 12 percent revenue growth for fiscal 2016, Global e-Commerce was the top performer among Wal-Mart Stores Inc. divisions.
As positive as double-digit sales increases would often be received by businesses, the growth was behind a 23 percent year-over-year revenue bump for online sales reported in the previous fiscal year. In the recently completed fourth quarter, sales were up, but at 8 percent.
Executives, as they have done for several years, maintained their positions that the future of retail and the long-term viability of Wal-Mart, will not depend exclusively on e-commerce. Global e-Commerce CEO Neil Ashe told reporters after the company's recent fourth-quarter earnings report that Wal-Mart is looking beyond its online performance and not comparing the growth with that of purely online competitors.
"We're really focused on building the customer relationship with Wal-Mart -- whether it's on the app, the site or the store -- so that we can be there for the customer to grow with her as she wants and needs," Ashe said. "That's why we're focused on expanding the digital relationship. ... And, so far, as indicated, the customer is reacting positively to that."
Wal-Mart continues to expand the merchandise available on Walmart.com. It has also begun promoting its site within stores, and is rapidly expanding services like grocery pickup and giving customers the ability to order general merchandise and then pick up purchases in stores.
Providing customers with multiple purchasing options is critical for retailers to take on, said Eric Howerton, CEO of WhyteSpyder, a Fayetteville-based retail marketing firm. Wal-Mart has the pieces in place to effectively reach customers whether they're shopping in stores, online or some combination of the two.
"Dot-com is just one piece of a total strategy," Howerton said. "If you look at the big picture, the omni-channel strategy, Wal-Mart is so far ahead of Amazon it's ridiculous. It all comes back to the shoppers. They're driving this thing. They're not going to shop only brick-and-mortar or only online.
"Wal-Mart has the brick-and-mortar infrastructure," Howerton said. "They have distribution beyond what Amazon does. Wal-Mart has invested in dot-com significantly. Amazon has to invest in brick and mortar significantly. You tell me which one is more expensive and more logistically challenging."
Other outside observers also see Wal-Mart's focus on omni-channel shopping as the smart play. Stock analysts have questioned the speed at which the retailer's investments in technology and fulfillment capabilities are paying off in terms of profit, but they view the retailer's distribution and fulfillment network, its ability to offer in-store pickup and 5,000-plus U.S. stores as a leg up on Amazon and other competitors, whether they operate online or physical stores.
Last year the company added four fulfillment centers, all in the neighborhood of 1 million square feet, to an existing distribution network that spans the U.S.
"Wal-Mart is very efficient on the distribution side and managing inventory," Morningstar analyst Ken Perkins said. "They have advantage with their size, and they can sell a high number of goods with low margins. They have the capability to fulfill e-commerce orders in a cost-competitive way. They can handle the demand. So they have to continue building a website that people want to use and make purchases."
As retailers invest billions in new stores, technology, distribution centers and other large-scale products, WhyteSpyder executives believe that the fight will boil down to something much smaller. They see individual product pages on e-commerce sites as the key to converting customers, something outlined in a recent case study and Markendizing, a soon-to-be-released book co-written by Howerton and WhyteSpyder chief operating officer Alex Ahmad.
Investment in product pages becomes even more important, Ahmad said, as customers expand their shopping habits to include online grocery orders and in-store pickup of general merchandise that they order online. Industry research suggests that anywhere from 70 percent to 80 percent of purchases made in stores are now influenced by mobility.
With tens of millions of products available on Walmart.com and hundreds of millions available at Amazon.com, the responsibility for presentation will fall to suppliers. Retailers will not be able to manage the volume product pages entirely on their own.
"People are hungry for data. They're hungry for content," Ahmad said. "Not just any data, but details that matter. You have to be committed to data and content. If you're not investing there, you're not reaching customers properly. It's game over."
SundayMonday Business on 03/06/2016