Walmart believes its future growth will come from sales made online, and the retailer may have its work cut out for it: A recent study found more of its brick-and-mortar customers use Amazon.com for their web purchases instead of Walmart's own site.
Walmart may be the world's largest retailer, but when it comes to online shopping, the megastore lags behind the competition — even with its own customer base. Recent studies suggest that only 19% of Walmart shoppers use Walmart.com, while 53% of them use Amazon.com. So if Walmart is so popular, why isn't it's website?
Turning Brick-and-Mortar Into Clicks
As the world's largest online retailer, Amazon beats everyone else in the online shopping space. But with worldwide e-commerce sales expected to top $1.4 trillion by 2015, it's no surprise that traditional retailers like Walmart want to get in on the action.
The question is whether Walmart's brick and mortar business model can translate to successful online sales. Walmart.com's sales rose by 30% in 2013 and the company predicts 30% growth this year as well. That might sound explosive until you realize that $10 billion in online sales accounts for a scant 2.1% of the retailer's $473 billion in total sales. Not to mention that Walmart's $10 billion lags well behind Amazon's $90 billion in yearly sales. And Walmart is paying dearly for its modest online success: the company spent an estimated $540 million on e-commerce last year, with plans to increase spending by $100 to $200 million this year.
On the other hand, one big advantage Walmart has is its physical stores, which could be used as distribution centers for same-day delivery or pickup — a puzzle Amazon is still working to crack.
Walmart Falters With Shipping
Still, Amazon's shipping is currently a lot speedier than Walmart.com's. Rush delivery from Amazon will have most products arrive the next day, whereas rush delivery from Walmart.com can take up to five days (it includes "processing time"), which is longer than many shoppers are willing to wait. Even items for which Walmart offers in-store pickup (which is far from its entire catalog) can take several days to be available. With waits like that, it's no wonder that even Walmart's dedicated in-store shoppers prefer Amazon for online purchases.
Shipping costs are a hurdle for online shopping, too, tacking on an extra price to purchases that can curtail online impulse buys. While Walmart.com offers free shipping on orders over $50 and free in-store pickup on some items, Amazon offers a lower bar with free shipping on orders over $35. And for many Amazon shoppers, the cost is bypassed with Prime membership, which offers free second-day shipping and low-cost next-day shipping on most items.
Elizabeth Harper is a contributing writer for Dealnews.com, where this article first appeared.