Walmart's Plan for Worldwide E-Commerce Domination

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Walmart's Plan for Worldwide E-Commerce Domination

By Tim Denman - 11/21/2016
To compete in the ongoing online retailing arms race, Walmart is bringing its sizable resources to bear to capture not only the U.S., but the global e-commerce market. CEO Doug McMillon recently laid out four key priorities for the retailer as it looks to not only continue to dominate the physical retail space but make significant inroads in e-commerce: make every day easier for busy families, operate with discipline, be the most trusted retailer, and deliver results and position the company to win.

Walmart has been playing catchup in the e-commerce space, as market leader Amazon continues as the gold standard upon which all other digital players are judged. Thanks to significant investments in its online capabilities, including its $3 billion Jet.com acquisition, Walmart believes it is making significant enhancements to its digital offerings which will help close the gap with rival Amazon.

"We're excited to see Walmart.com gaining traction," McMillon said on a recent earnings call with analysts. "We're scaling fast, adding eight million SKUs over the last three months alone. E-commerce contributed 50 basis points to our Q3 Walmart U.S. comp, which is our largest contribution yet. It's great to see an improving e-commerce business complement the momentum we have in our stores."

Since Walmart announced the Jet.com acquisition in August it has been working quickly to merge the two companies and use its considerable scale to increase the operations of both entities. "One of the reasons Jet.com makes sense for Walmart is the common ground we share with basket economics," McMillon said. "Walmart's advantage has always been in providing the lowest prices on a basket of goods, and Jet has created a unique way to deliver the lowest cost basket online. When customers build a bigger basket online, the economics work in their favor and in ours."

Former Jet.com CEO Marc Lore is driving U.S. e-commerce for both Walmart and Jet, and McMillon has been pleased with the speed with which the companies have integrated. "Marc has hit the ground running since the acquisition was finalized," McMillon said. "We immediately set up teams to accelerate our integration efforts and we're working hard to leverage our strengths, such as optimizing our combined fulfillment networks, utilizing our scale in areas like shipping, sharing our assortment and leveraging the strengths of our marketing teams. We're excited to reap the benefits of our combined businesses."
 
In addition to investing heavily in its U.S. e-commerce operations, Walmart is looking to grow its international business, particularly in China. Online shoppers in China, just like their American counterparts, are making purchase decisions based on the speed and convince with which orders can be fulfilled.  

To build out its fulfillment capabilities in China Walmart announced that it plans to invest $50 million in Chinese online grocery and delivery company New Data. "Already, New Dada is enabling two-hour delivery service from more than 45 Walmart locations, McMillon said. "It's amazing to see how O2O [online-to-offline] is changing how Chinese consumers shop. Densely populated cities and favorable delivery economics enable two-hour delivery and we look to expand the number of locations using New Dada for two-hour delivery going forward."

In addition to its e-commerce efforts at home and abroad, Walmart is investing in digital capabilities for its stores to blur the distinction between online and physical retailing. For example, the retailer has launched Scan & Go nationwide at its Sam's Club locations. The mobile check out and payment solution allows members to skip the checkout lane.  "We're pleased with the adoption of this service and we're excited about how it will improve our members' experience, making it easy to shop and save time," McMillon said.