Without Genuine Strategy, Walmart Has No Long-Term Chance Against Pure Players


Besides pulling out all the stops, Walmart has a hard time keeping up with Amazon.


The world’s largest retailer did everything to gin up e-commerce sales, from starting its Black Friday sales online on the morning of Thanksgiving, to turning Cyber Monday into Cyber Sunday, to having an upgraded mobile app that helped shoppers do things like alert a store they were coming in to pick up an order.

But the retailer, the second largest e-commerce player in the world, has only modest gains to show for its efforts: global e-commerce sales rose 8% in the fourth quarter that ran from November to January. That was the company’s lowest pace yet. (To be fair, much of the decline was attributable to sluggishness in Britain, China, and Brazil. Walmart doesn’t break out its U.S. figures.)

Business of Fashion:

Despite Wal-Mart’s spending, the company still is falling short of Amazon on price and selection, said Guru Hariharan, chief executive officer of research firm Boomerang Commerce. During the holidays, Amazon was able to beat Walmart.com in key areas like electronics, toys and housewares, and Target Corp. also sold items for cheaper in some categories, he said. And Amazon had a significantly bigger selection than Walmart.com in every category Boomerang tracked.

“Why would I ever go to Walmart.com and shop there when I have lower prices on Amazon and a much higher assortment on Amazon?” Hariharan said. “Wal-Mart has to do some soul searching and figure out what it stands for. They aren’t going to be able to compete on lowest price and biggest selection anymore with Amazon.


Over the course of the year, Walmart’s online sales increased 12 percent to $13.7 billion. However, Amazon’s net sales for 2015 increased more, growing 20 percent to $107 billion.

Amazon has the advantage of a larger online presence in international markets, a larger selection and number of products online, and a more successful mobile app and customer loyalty program in Amazon Prime.

Amazon alone generated half of overall U.S. e-commerce growth, according to some analysts.

This more than anything should show how much of a strategic advantage online pure players have other traditional retailers expanding into online. One reason are backward strategies like this:

The retail giant has also expanded the number of stores where shoppers can pick up grocery orders placed online to 150 in 20 markets, from 140 locations a few months earlier.

Behind this are incentives that hinder every brick-and-mortar retailer against online pure players:

It is “How do we use our retail stores to our advantage?/How can we bring online to our retail stores?” (traditional retailers)


“How can we most efficiently serve our customers?” (online pure players)

The incentive is to use the thing that also represents the highest cost structure in your company for every strategy that is meant to become a main part of the future of your company. You can not ignore that big honking cost elephant in your company. Because so many people’s salaries and careers are tied to that biest and isn’t that also your biggest asset, the one thing your company makes the majority of its revenues with? The one thing competitors, like Amazon, can’t easily replicate? (Because it is so expensive to get in the first place!)

Ask yourself this: If it really makes sense to use stores for customers to pick up their online orders, why is it then that only retailers with existing chains come up with this ingenious strategy? Why is no online retailer setting up stores for people to pick up their online orders?

Here is the gist, the main problem retailers like Walmart are facing going forward, via Fortune:

When asked whether Amazon was leaving its rivals in the dust, Ashe didn’t address the question directly, instead suggesting that Walmart.com was more about giving Walmart customers more options.

Walmart is not trying to get more customers. It is trying to give existing customers marginally better options for shopping at Walmart. (Ordering online instead of in-store, with everything else being the same as shopping in the store to begin with, is one of these options.)

This is Multi-Channel. And Multi-Channel is always an overassessment of one’s own brand.

If Walmart thinks it just has to cater to its existing customer base with a few online options, it is in serious trouble. If Walmart thinks its strong offline brand is enough to be competitive against online pure players, it is in very serious trouble.

Compare this on a strategic level with the several platform plays by Amazon from Amazon Prime to Echo to the Dash Replenishment Service to the companies logistics initiatives.

If Walmart has a hard time today competing with Amazon how is it hoping to fare well tomorrow without having answers of its own to Amazon’s initiatives?

One last sidenote: Walmart is trying together with other U.S. retailers to establish a new payment system with CurrentC. (The consortium is called MCX and was established in 2012.) CurrentC took multiple years to be build. First incorporated to sidestep credit card fees and later positioned additionally as a defensive move against Apple Pay, it is safe to say that the yet-to-be-launched CurrentC is a spectacular disaster today. One result of CurrentC was an exclusivity clause forbidding participating retailers to use Apple Pay. The only problem is that those clauses ran out before CurrentC even launched.

Walmart is now also planning on launching its own mobile payment system, Walmart Pay, later this year. One wonders how that is going to go. Or does one?

One comment

  1. […] Without Genuine Strategy, Wal-Mart Has No Long-Term Chance Against Pure Players […]


%d bloggers like this: