Walmart's closes the gap between itself and the online leader its acquisition of Jet.com and products that appeal to younger shoppers gave it an e-commerce boost. The world's largest retailer is betting on essentials like cereal and diapers, 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.
He further stated in Jet headquarters in Hoboken, N.J that the company is happy with the results and moves that they are making. Since it is a big market, e-commerce sales industrywide are still growing 15 per cent per year he noted.
As Walmart prepares to show off some of its innovations this week before its shareholder meeting, there are signs that things are starting to click.Sales at Walmart.com rose 63 per cent in the first quarter, up from 29 per cent growth in the previous quarter and marking its fourth straight quarter of increases. Despite its acquisitions, Walmart says that a majority of the increase was through Walmart.com and was fuelled by changes in its shipping strategy and a discount for shoppers who pick up their online orders. Walmart 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 Channel Advisor, points out saying that for some shoppers it has become ingrained that they start and finish their shopping at Amazon, and the Prime program reinforces that. He says Walmart wasn't putting a sufficient emphasis on keeping up.
According to Spitz ifthe gap was widening Jet.com was intended to be a jolt. Walmart is clearly being more aggressive. There is a sense of urgency, but whether that is enough is the multibillion-dollar question he added.
Amazon accounted for 33 per cent of U.S. online sales last year, according to the research firm Euromonitor. Walmart moved into second place ahead of eBay, with 7.8 per cent. Greg Melich, an analyst at research firm Evercore, estimates that Amazon customers spend an average of $800 annually on the site.
As per Melich, If Amazon's relationship with Prime members continues to grow, then Amazon's path toward Walmart's nine per cent of the total U.S. retail market from its current three per cent is reasonable.
