Walmart has a Severe Tummy Ache

Walmart is in a bit of a pickle. It grew because it had a clear vision — to offer the lowest prices to persons who did not have a lot of cash. They did this via super-stores in relatively less well off areas. And it worked brilliantly.

So what is wrong? Simple. Walmart cannot offer stuff more cheaply than e commerce platforms can. They have the potential to be more efficient. So Walmart has no choice but to learn how to cope.

The firm has to re-learn how to be successful.

The first step was pretty obvious. If you can’t beat’em, join’em. Walmart started to offer produts online as well. And it became clear pretty quickly that the optimal model here was to combine online and bricks and mortar store experiences. The question is how? And how much time does Walmart have to figure out e commerce?

Good questions. Now consider this (from Motley Fool)

Shares of Target Corporation  (NYSE: TGT  ) hit an all-time high this week as the retailer topped estimates in its fourth-quarter report. A big reason for the better-than-expected showing was the company’s dramatic improvement in e-commerce. Sales through the online channel accounted for nearly 25% of the company’s 3.8% comparable sales growth for the last quarter, and more than half of its 1.3% comparable sales growth for the year. E-commerce sales growth more than doubled from 2013 to 30% in 2014, better than two of its biggest rivals, Amazon.com,  (NASDAQ: AMZN  ) , and Wal-Mart Stores,  (NYSE: WMT  ) . In addition to that growth figure, Target also lowered its minimum purchase requirement for free shipping to below that of Amazon and Wal-Mart, and has increased its conversion rate sharply in the last four years.

In other words, Walmart is not winning here — at least not yet. Let’s see how this plays out. It is a very interesting market.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s