retail news in context, analysis with attitude

Walmart yesterday said that its first quarter e-commerce sales rose 63 percent, which it said was a reflection of its online marketplace overhaul and the impact of its acquisition of Jet for $3.3 billion. Reuters writes that "U.S. e-commerce chief Marc Lore told reporters online sales growth was boosted by the decision to offer free two-day shipping without membership fees and higher repeat orders."

At the same time, Walmart said that US same-store sales were up 1.4 percent, the eleventh straight quarter during which it saw same-store sales increases.

Fortune provides the following analysis:

"Marc Lore, the founder who last year became head of Walmart's U.S. e-commerce efforts declined on a media briefing to say how much of that growth was attributable to its marketplace. Such items are not included in Walmart's in-store pick up and therefore less valuable in terms of fostering the interplay between stores and digital sales that Walmart is betting on to fight Amazon.
Still, Walmart has also made improvements to its shopping and payment apps, pushing customers to come into stores by offering them incentives such as line-busting privileges.

"What's more, it's using e-commerce to try to direct more shoppers to stores to generate sales there while also protecting margins: Walmart recently started offering discounts for orders placed online but picked up in store, which saves shipping costs. But the retailer remains very far behind Amazon, whose online sales are about six times greater in the U.S."

Bloomberg provides the following context:

"The results signal that Wal-Mart is getting a payoff from an ambitious online expansion, which included last year’s $3.3 billion acquisition of The Bentonville, Arkansas-based company now boasts 50 million items on its website, up from 35 million the previous quarter, and its offer of free two-day shipping for orders of $35 or more has boosted site traffic and spending, executives said."

And, Bloomberg writes:

"The acquisitions have helped burnish Wal-Mart’s online image, though the majority of e-commerce growth came from its longstanding site last quarter. Its digital growth rate was nearly triple that of Target. Amazon’s sales of so-called retail products climbed 16 percent last quarter."
KC's View:
I've always believed that Walmart eventually would come up with a strategy making it more competitive with Amazon's online offering; I didn't think it would necessarily mean a $3.3 billion acquisition of an unproven e-commerce business. But what makes Marc Lore different from many of the other folks at Walmart is that he is a technologist who sees the world differently, and he doesn't have a bias toward bricks-and-mortar. He does, however, appear to see physical stores as a potential advantage in the fight against Amazon ... and that is interesting.

I hardly think this spells doom for Amazon - the company's DNA for innovation and "day one" thinking will continue to make it formidable ... and maybe unbeatable. But Walmart certainly is going to make it more interesting.

Inevitably, there will be a lot of collateral damage. Be afraid. Be very afraid.