Walmart sets sights on Amazon

By George Anderson

OCTOBER 16, 2014

14
inShare

11

With foot traffic and sales at its U.S. stores continuing to disappoint, Walmart continues to look for answers to build its business anywhere it can. One response has been to invest more in e-commerce and digital operations. Yesterday, the company said it plans to invest even more over the next year.

The investments will be between $1.2 billion and $1.5 billion in its next fiscal year, up from roughly $1.0 billion this year. The company plans to use the money for technology, infrastructure and other areas it believes will support e-commerce and digital initiatives.

Walmart is building two new online fulfillment centers, each over a million square feet in size, in Georgia and Pennsylvania. These new facilities, according to the company, "will be part of its next generation fulfillment network that includes dedicated online fulfillment centers, shared distribution centers, and ship-from-store locations that are all tied together by one of the biggest and most efficient transportation networks in the country."

The retailer has seen big gains in its online business. Reports earlier in the year made a big deal of Walmart.com's year-over-year growth (30 percent) topping Amazon.com (27 percent) for the first time.

As it has done in the physical stores, price is a big part of Walmart's plan to compete with its rival. According to a recent study by Wells Fargo and 360pi, Walmart (and Target) had lower prices in key categories such as clothing, electronics and housewares than Amazon.

"We are delivering best in class e-commerce capabilities that we are combining with the assets of the world's largest retailer to engage with customers in new ways," Neil Ashe, president and chief executive of Walmart Global ecommerce, told attendees of the company's 21st annual meeting for the investment community. "We have delivered the core components of our new global technology platform. We are expanding our next generation fulfillment network to reach our customers fast and efficiently, and we're building new data capabilities to enhance our customer experience"