ADVERTISEMENT
ADVERTISEMENT

Walmart ramps up e-commerce with two new initiatives (WMT)

Walmart has been actively expanding its efforts to boost its e-commerce operations recently, as the company looks to better compete with online retail giant Amazon. And this week, it announced two new initiatives to that end:

Walmart Ecommerce Sales
  • Its subsidiary, Jet.com, will acquire ModCloth — a bohemian vintage clothing brand selling primarily online, as reported by Jezebel.
  • In addition, it plans to invest 17 billion pesos ($863 million) in Walmart de Mexico in 2017, according to The Wall Street Journal. This is an increase of 19% from last year's investment in the Mexican business unit, commonly referred to as Walmex, and the retail giant plans to allocate 23% of the budget to logistics and e-commerce.

ModCloth is Walmart’s third acquisition in 2017 aimed at building its e-commerce presence among millennials. ModCloth’s customer base is made up of mostly millennial women, which could help Walmart increase engagement beyond its typically older clientele. Walmart also just bought Moosejaw, an outdoor apparel and gear retailer with a strong millennial following and online presence, for $51 million in February. And at the beginning of 2017, it acquired e-commerce shoe retailer ShoeBuy for $70 million. Moreover, apparel is the top retail category in terms of online sales, and currently dominated by Amazon. Walmart is likely positioning itself in a high-growth segment, with a customer base known for online shopping, to fight growing competition from the e-commerce titan.

Meanwhile, the company's increased investment in Walmex signals it's fighting to keep its market share as Amazon expands in Mexico. Indeed, this announcement comes a little more than a week after Amazon announced it's bringing its Prime subscription service to the country. Walmart and Amazon each have a 5.5% share of the e-commerce market in Mexico, but with Amazon Prime entering the space, Walmart may lose customers due to Prime’s free and fast shipping.

As Walmart stated in December, it plans to build out its logistics network by adding more distribution centers in Mexico and upgrading its existing ones. And although it didn’t specify which e-commerce initiatives it had planned, it could utilize its physical locations to provide ways for shoppers to pay in cash for online purchases, similar to the service MercadoLibre provides through Occo convenience stores. Reaching Mexico’s largely unbanked population will be key for any e-commerce player in that market.

ADVERTISEMENT

Although there is a huge gap between Walmart and Amazon in terms of online sales, the retail giant still overshadows Amazon in total revenue, and it can leverage its enormous amount of capital to build a strong online presence quickly. Amazon’s online sales were $92 billion last year, while Walmart had an estimated $13.7 billion in 2015. However, Walmart reported total revenue of $486 billion in 2016, compared with the $136 billion Amazon generated. Walmart is clearly leveraging this advantage, as its been making acquisitions at a breakneck pace, and quickly increasing its investment in markets where it directly competes with Amazon.

BI Intelligence, Business Insider's premium research service, has compiled a detailed report on new e-commerce strategies that looks at some of the top trends affecting retailers at each stage of the purchase funnel and how they're responding to those shifts.

  • Within digital, consumers are spreading out their retail purchasing across channels, forcing retailers to spread out their online marketing budgets. Paid search, affiliate marketing, and email all increased their share of e-commerce referrals last year, according to Custora.
  • Paid search especially stood out as a major source of spending by retailers. Search ad spending grew 18% YoY in Q4 2015, according to IgnitionOne.
  • Mobile continues to drive the most sales growth for retailers, but sales still aren't keeping up with retail traffic. IBM found that smartphone traffic beat both tablet and desktop, making up 53% of all online traffic. But mobile still only accounted for 29% of all online sales.
  • Retailers only have themselves to blame for underperformance on mobile, as many still aren't using best practices for mobile websites and apps. Only 60% of the top 100 global retailers currently have a dedicated mobile website, according to The Search Agency.
  • The increase in online shopping has put stress on the shipping and logistics industry. The number of UPS ground packages delivered on time during the holidays fell from 97% in 2014 to 91% in 2015, according to ShipMatrix.
  • Retailers are beginning to explore alternative shipping options. Earlier this year Gilt Groupe switched its primary ground shipper from UPS to Newgistics.
  • Retailers that can't afford to invest in alternative shipping options are offering consumers more fulfillment options using what many of them
ADVERTISEMENT
  • Looks at how retailers are shifting their ad spending and marketing efforts to keep up with online retail behavior
  • Identifies which channels are top performers for referral traffic and new opportunities for reaching consumers
  • Analyzes how retailers are responding to the rise of mobile purchasing and where they're falling short
  • Examines the evolving delivery landscape and the aggressive moves retailers are making to become their own shipping carriers

JOIN OUR PULSE COMMUNITY!

Unblock notifications in browser settings.
ADVERTISEMENT

Eyewitness? Submit your stories now via social or:

Email: eyewitness@pulse.ng

Recommended articles

7 do's and don’ts of the Holy month of Ramadan

7 do's and don’ts of the Holy month of Ramadan

Top 5 sweetest celebrity mother-child relationships that stand out for us

Top 5 sweetest celebrity mother-child relationships that stand out for us

International Women's Day: 5 Nigerian female celebrities championing women’s rights

International Women's Day: 5 Nigerian female celebrities championing women’s rights

Top 5 female directors in Nollywood

Top 5 female directors in Nollywood

6 things that will break a Muslim's fast during Ramadan

6 things that will break a Muslim's fast during Ramadan

5 benefits of fasting during Ramadan

5 benefits of fasting during Ramadan

Dos and don’ts of supporting Muslims during Ramadan

Dos and don’ts of supporting Muslims during Ramadan

Here are common things people rarely dream about

Here are common things people rarely dream about

5 young women who embody Y2K and alte fashion

5 young women who embody Y2K and alte fashion

ADVERTISEMENT
ADVERTISEMENT