HOBOKEN, N. J. – Even after an online spending spree, it might be difficult for Wal-Mart to escape to the Amazon in the room.
Wal-Mart’s acquisition of Jet.com and brands that appeal to younger buyers gave it a e-commerce boost as it works to close the gap between themselves and the online leader. The world’s largest retailer is betting on essential things such as fresh products, and has adjusted the shipping strategy in order to better compete with Amazon Prime program. But Amazon continues to innovate, also the implementation of new technology and try to make shopping more convenient.
Marc Lore, a co-founder of Jet.com who is now head of Wal-Mart in the US. online activities, ” he says confidently about the company’s momentum and there is plenty of space for the thrive.
“I can tell you, we are happy with the movements that we make, and we are happy with the results,” Lore said on the Jet headquarters in Hoboken, New Jersey. “It’s going fast. It’s about innovation. And it is a very large market.” He noted that e-commerce revenues at the sector level are still 15 percent per year.
Lore led Wal-Mart’s acquisitions of specialist online retailers such as ModCloth, Moosejaw and ShoeBuy.com and said that he is still looking for companies that have expertise in categories where Wal-Mart wants to grow faster.
As Wal-Mart prepares to show off some of the innovations of this week for the general meeting of shareholders, there are signs that things are starting to click.
Sale on Walmart.com rose 63 percent in the first quarter with 29 percent growth in the previous quarter and marking its fourth straight quarter of increases. Despite its acquisitions, Wal-Mart said a majority of the growth was by Walmart.com and was fueled by changes in the shipping industry strategy and a discount for shoppers who can pick up their online orders. Walmart.com now provides 50 million products, including that of a third party vendor, up from 10 million a year ago. In comparison, Amazon has hundreds of millions of products.
David Spitz, CEO of consulting firm ChannelAdvisors, says for some shoppers it has become ingrained that they start and finish their shopping at Amazon, and the first program reinforces that. He said Wal-Mart was not putting enough emphasis on conservation.
“If anything, the gap is narrowing,” Spitz said. “Jet.com was meant as a shock. Wal-Mart is clearly more aggressive. There is a sense of urgency, but will that be enough, is the multibillion-dollar question.”
Amazon is good for 33 percent of U.S. online sales from last year, according to research firm Euromonitor. Wal-Mart moved into second place with a lead of eBay, with 7.8 percent. Greg Melich, an analyst at research firm Evercore estimates that Amazon customers spend an average of $800 per year on the site, and the members of its $99 per year Prime program spend on average 2.7 times more than others.
If Amazon’s relationship with the Prime members continues to grow, Melich said recently, Amazon’s path in the direction of Wal-Mart’s 9 percent of the total U.S. retail market from the current 3 percent is “reasonable.”
As Lore is concerned, that he does not recognise.
“We don’t think it’s specifically about the Prime,” he said. “We think we have a customer base —customers who want to be able to save money and they want to be able to shop in different ways, either direct-to-home, grocery pick-up, or to the physical store.”
Its 4,700 stores are an asset for Wal-Mart, if they are against the larger retail trend, seeing increases in shopper numbers and sales. The discount for pick-up store has helped shoppers. Wal-Mart says the expansion of stores with curbside pick-up for the groceries helps, because people realize that they forgot an item or two and in the shop. And as rivals such as Target struggle to get their shopping departments right, Wal-Mart is placing a priority on the essentials, such as peanut butter, paper towels and fresh produce that shoppers often buy.
Amazon stores are mainly showcases for gadgets, or his textbook and furniture pick-up locations for students. But it continues to innovate, and the testing of an Amazon Deal supermarket, where sensor track items as shoppers go and there is no need to check. Amazon just opened his first bookstore in Manhattan, and seventh in general. In addition, Amazon also launched two grocery pick-up kiosks in Seattle that allows Prime customers to buy fresh produce online and pick up in as little as 15 minutes instead of having them redeemed. The service is free, and there is no order minimum.
Transmission remains intense competition. Amazon Prime members in more than 5000 cities and municipalities can receive orders the same day or the next day, depending on the item and the location. Via Prime Now members in more than 30 towns and cities can get a number of items in an hour or two.
“We have competition every day of our existence on Amazon and it has never changed our approach,” Amazon says. “We are obsessed about customers and the things that we believe that the customer always care about — low prices, large selection and fast delivery.”
Wal-Mart has updated the shipping program and now offers free, two-day shipping for orders placed of the most popular items with a minimum order of € 35. Lore says Wal-Mart customers are placing more orders and spend more money than before. In April, Wal-Mart is launching a service called Easy the Order in which items shoppers buy with their credit card at a store will be a pop-up on their online account for the addition.
As more integration happens behind the scenes of Walmart.com and Jet.com, Lore says that after a period of time, Jet “smart cart” technology will be integrated in the Wal-Mart site. Jet was built on a real-time pricing algorithm that determines which sellers are the most efficient in value and shipping costs. The fit prices and encourages customers to buy certain items for more savings. Wal-Mart says that helping people to shop smarter, by encouraging them to build an order of $35 and the offer of additional discounts for the store pick up of online orders.
And Lore says the plan is to go to a couple of hundred million products on Wal-Mart’s website in the coming years.
“We want to sell them anything,” Lore said. “The range is growing fast,” he said. “But we know that in certain categories, we need more progress.”
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