retail news in context, analysis with attitude

Fortune has a story about how Walmart is trying to compete more effectively with Amazon, "to further build its e-commerce muscles to help combat recently tepid growth in sales and traffic at its brick-and-mortar stores — especially when Amazon and others are pouring billions of dollars into their own e-commerce plans."

The story notes that "Walmart has in recent years equipped more than 80 of its U.S. super centers to help fill online orders and speed up delivery. That’s about the same number of distribution centers Amazon operates. The retailer now also lets shoppers pick up online non-grocery orders at any of its 4,500 U.S. stores, a concession to consumers’ growing demands for convenience. And Walmart recently opened four new automated distribution centers dedicated to filling online orders, each 1.2 million square feet in size — or as big as 20 football fields."

Four other passages from the story:

• "Other Walmart initiatives include rolling out a simplified checkout process on in the U.S. to improve the shopping experience on mobile devices, the source of most of retail’s e-commerce growth."

• "To compete with Amazon’s Prime — a subscription service that garners repeat trips from customers who want to get their money’s worth for their $99 annual fee — Walmart is turning to the old-fashioned price competition on which it built its empire. Earlier in June, it started testing, on an invitation-only basis, a new delivery service called Shipping Pass. The unlimited free three-day delivery service costs $50 a year, or half of what Amazon charges for Prime, which currently offers free two-day shipping."

• "Where Walmart could prove to be a particularly formidable rival to Amazon and its AmazonFresh service, a service similar to Prime but for grocery in that new front in the delivery wars.

"Walmart gets 56% of U.S. sales from food (or about $161 billion last year), making it by far the biggest U.S. grocer, with much more expertise in selling food than Amazon. It’s testing out a kiosk, called Walmart Pickup-Grocery, near its headquarters in Bentonville, Arkansas, that looks a lot like a gas station (see below) but is really a new way to get groceries to customers."

• "More generally, the company is expanding its online assortment. Walmart said it will offer 10 million different kinds of items (shelf-keeping units, or SKUs, in retail parlance) online by year-end, compared to 7 million now and 700,000 just a few years ago. That is dwarfed by Amazon’s 250 million-item selection. But it’s a much bigger selection that what is available in a Walmart super-center large-format store, which typically stocks only 100,000 SKU’s."
KC's View:
There's no question that Walmart is going to able to grow its e-commerce business, and I continue to believe that at some point it will announce a big, fast expansion of its click-and-collect/kiosk business to an enormous number of stores around the country.

But I also believe that the big difference between Amazon and Walmart is that Amazon seems more focused on customers, and Walmart on supply chain ... and I think that's a weakness. But I also think there's going to be a lot of collateral damage from this war...