Long story short

• For nearly 20 years Walmart, the world’s largest retailer, has struggled to pull its online act together while rival Amazon.com seized nearly half of the U.S. online shopping market and snared a big presence abroad.
• But now the company’s multibillion-dollar investment campaign seems to be paying off in the form of online sales that are beginning to rejuvenate the entire long-slumbering colossus.
• Fiscal 2019 online sales gains of 40%, and another 37% in the first half, accounted for about half of Walmart’s entire U.S. growth in same-store sales.

What’s going on here?

• For a business expected to lose nearly $2 billion this year, Wall Street sure is high on Walmart.com. The company reported its second-quarter earnings, which topped expectations and raised its outlook for the full year, building on the momentum in its core U.S. business, online operations and investments into grocery.
• For nearly 20 years now, Walmart, the world’s largest retailer, has struggled to pull its online act together while rival Amazon.com seized nearly half of the U.S. online shopping market, as well as building a big presence abroad. But in recent years it has begun to evolve toward the online giant it can become.

What does it mean?

• The company’s multibillion-dollar investment campaign — from the acquisitions of U.S. etailer Jet.com in 2016 and a 77% stake in India-based web marketplace operator Flipkart, to a doubling of its spending on e-commerce and other information technology to $5 billion a year since 2014 – seems to be paying off
• How did Walmart turn its ocean liner of a business in a better direction? The key, for now, has been to pay less attention to Amazon and instead focus Walmart.com more on grocery, a category Walmart dominates in physical stores. Its goal is less to catch up to Amazon than to join the Seattle online giant in clobbering other offline stores as retailing, in general, consolidates.
• Walmart has always been a savvy user of technology in its stores, driving productivity gains that helped it cut prices, which in turn made it the dominant retailer in America by the time Amazon launched in the mid-1990s.

What’s next?

The next step will be to build up the general merchandise part of Walmart.com, especially in higher-margin categories like apparel and shoes. Flipkart will help Walmart learn tricks of building high-profit marketplaces for other merchants to use Walmart’s sites as a platform, a business in which Walmart is much smaller than Amazon.

Content source: Mullaney. T. (2019) This is what’s behind Walmart’s staying power that could outmaneuver Amazon. CNBC. Available from: https://www.cnbc.com/2019/08/15/walmarts-secret-weapon-in-its-quest-to-outmaneuver-amazon.html [Accessed 20 August, 2019]