Taking on Amazon isn’t so easy, even for one the world’s mightiest retailers.
This is not to say superstore kingpin Walmart won’t eventually give the Seattle-based e-commerce giant a serious run for the online money, but it isn’t there yet.
Far from it.
Walmart announced Tuesday that its fourth quarter e-commerce sales grew 23 percent, down from a 50 percent hike in the previous quarter. In contrast, Amazon’s net sales were up 38 percent in the fourth quarter, compared with 34 percent the quarter before. That translates to $60.5 billion in quarterly sales and more than 5 billion items shipped.
Walmart’s stumble comes as a surprise, especially since it was expected to step up its game against Amazon during last year’s crucial holiday buying season, giving shoppers greater online choice and selection.
Instead, the superstore chain’s lackluster e-commerce sales were brought on, in part, from operational snafus including unanticipated inventory shortages of basic products like toilet paper and toothpaste.
That has some worried Walmart could become the online retailer that can’t shoot straight. The company’s stock price plunged 10 percent to about $94 per share after Walmart announced its e-commerce sales.
“We experienced some operational challenges that negatively impacted growth,” said Doug McMillon, Walmart CEO and president, during the quarterly investor conference call.
Right now, Walmart is scrambling to regain its online mojo in hopes of achieving 40 percent e-commerce sales growth for this year.
Recurring customer gripes about Walmart.com include unhappiness about faulty or slow product delivery and confusion over its return policies, according to a spot check of online customer complaints posted on ConsumerAffairs.com, which tracks reviews of many retail sites.
What’s more, the sheen is coming off the chain’s much-heralded, $3 billion acquisition of online consumer products seller Jet.com. Purchased in 2016, that site accounted for the lion’s share of the company’s e-commerce sales boom last year but now is showing signs of leveling off.
Jet.com does well in major metropolitan areas ripe with millennials, like Chicago and New York, selling stylish and trendy products from Bonobos, Modcloth and Moosejaw, online sites Walmart acquired in recent years for a total of $175 million. Now Walmart wants to reassert its e-commerce connection with Middle America, a customer base that’s also a staple of its massive bricks-and-mortar Wal-Mart superstore empire.
The Arkansas-based retailer is going to put more resources behind its namesake Walmart.com site, McMillon told analysts. That push includes the springtime launch of a Lord & Taylor landing page on Walmart.com.
Even with the added attraction of a well-known apparel retailer, Walmart.com’s emphasis will be on selling an expanding array of consumer products that compete more directly with Amazon’s wares.
This year, much of the Amazon versus Walmart battle will also be waged in the food aisles.
McMillon stresses his company is expanding ways e-commerce customers can order groceries online along with speedy customer pickup at the stores. This strategy is designed to beat back a similar “click and collect” tactic that Amazon is putting into place at its Whole Foods unit, which has over 400 stores.