Walmart shows it can play the online game

The American retail corporation is flexing its e-commerce muscles.
28 February 2019 | 533 Shares

The US retailer is ramping up its online presence. Source: Shutterstock

Big spending Walmart is now a major threat to arch enemy Amazon. If you want proof, look at its blow out holiday sales results.

Walmart US e-commerce sales grew 43 percent, in line with the previous quarter’s rise, as it benefitted from the expansion of grocery pickup and delivery and a broader assortment on Walmart.com.

The retailer is on track to capture a 4.6 percent share of the US e-commerce market, behind eBay and Amazon, according to eMarketer.

Its business has benefitted from strong growth throughout 2018 at both bricks and mortar, and online, and there was no let-up in Q4, notes Andrew Lipsman, principal analyst at eMarketer. Continued investments in the store experience and excellent omnichannel execution ensured Walmart was well-positioned to take advantage of the economic tailwind during the 2018 holiday season, he adds.

Doug McMillon, Walmart’s President and CEO, talked about reaching customers in a more digitally-connected way. We’ll be there when, where and how they want to shop and deliver new, convenient experiences that are uniquely Walmart, he said.

This includes testing out Spark Delivery, which crowdsources independent drivers to fulfil the last mile grocery delivery process. This is using an in-house platform that provides drivers with the ability to sign up for windows of time that work best for their schedule as well as grocery delivery order details, navigation assistance and more.

Components of Spark are powered by Bringg, a delivery logistics technology platform. The initiative engages the services of independent drivers who partner with Delivery Drivers, which specializes in last-mile contractor management, to complete deliveries.

The elephant in the room

If there’s a potential downer here, it’s the US$16 billion purchase of Indian online retailer Flipkart. It recently emerged that India is tightening restrictions on foreign e-commerce companies operating in the country.

These are unable to hold their own inventory and ship it out to consumers. But they can work around this by operating as online marketplaces and selling what is effectively their own products held by affiliated local companies. That loophole is now being closed, however.

Walmart admitted that there was “some disruption to business” but insisted it doesn’t “currently expect there’ll be any significant impact”. It remains optimistic about the size of this market and low penetration of e-commerce, and plans to work with the Indian government on “pro-growth” initiatives.

The Amazon effect

Amazon is often portrayed as the destroyer of traditional retailers. However, in a recent blog post, Natalie Berg, retail analyst and founder of NBK Retail, argued that in many ways the e-commerce giant has been a force for good.

It has stamped out complacency and made everyone raise their game, all to the benefit of the customer. What would Walmart look like if Amazon didn’t exist? Very different to the success story described in this article, it could be argued.

Most of Amazon’s innovations catch competitors on the back foot, leaving them in the undesirable position of reacting to rather than leading change, Berg notes. But not Walmart, which is most definitely on the front foot these days.

Of course, it has a massive advantage over most other retailers. It invested over US$11 billion in technology last year, it revealed at NRF 2019, which took place in New York earlier this year. That makes Walmart the third biggest spender in the world after Amazon and Alphabet.

Nonetheless, there is much to be learned from its digitally-connected approach to retail in 2019 and beyond.