The world’s largest retailer, Wal-Mart Inc.’s CEO Doug McMillion announced the company plans to become “more of an e-commerce company” at an investor presentation in October 2016. “We’ve got to build this e-commerce business in this country and in others to be there in the future”, McMillion was quoted as saying. The company is projecting 20-30% growth in online sales from July-December 2016.
So, just how does Wal-Mart plan to bolster their e-commerce standing against Amazon? By spending $11 billion dollars. (Not a typo). Yes, by spending $11 billion dollars investing in e-commerce. Wal-Mart is going to expand their grocery delivery services as well as the amount of products available on Wal-Mart.com. The cost will be offset by cutting down on new store openings.
$3.3 billion of that $11 billion dollar investment went toward buying out Jet.com. Jet.com closed up shop in September 2015 as part of a deal with Wal-Mart. Jet.com CEO Marc Lore became the CEO of Wal-Mart e-commerce. So, what does Wal-Mart get from the acquisition? Well, for starters Jet.com has averaged about 500,000 new customers per month over the past 12 months, so there’s that. (By the way, Jet.com is the biggest winner here.) The other large investment was in JD.com, which is one of the largest e-commerce players in China.
Wal-Mart.com has already increased the amount of items available online from 8 million in January 2016 to 20 million in October 2016. That’s a big increase and great news for merchants that sell online through Wal-Mart.
Amazon is far in front of Wal-Mart in terms of e-commerce and had roughly seven times as much in revenue over the past year. ($99.1 Billion vs. $13.7 Billion). But, you can bet that they are paying close attention to their rivals latest moves. Although Amazon has 40 gigantic warehouses in the United States, Wal-Mart has arguably the best freight delivery system in the world already in place and 4,600 stores.
Wal-Mart currently faces the immense task of intergrating Jet.com in time for the busy, high-stakes Holiday season. Should be interesting to watch.
Carl De Lucia – Digital Strategist & Web Developer