Online will be the latest driver of Wal-Mart Stores’ growth, the chief of the world’s largest retailer’s e-commerce operation has claimed.
Neil Ashe, president and CEO of Wal-Mart’s global e-commerce unit, said the channel would be the US retail giant’s “next growth engine”.
Go deeper with GlobalData
He said: “We’ve won in successive waves of retail – whether it be the discount stores, the wholesale clubs, grocery on international – and now we’re focused on e-commerce. We’re building best-in-class capabilities that allows us to do things for customers that no-one else can do.”
Speaking at the Barclays Retail and Consumer Discretionary Conference in New York yesterday, Ashe said Wal-Mart was investing in three areas to “win” in e-commerce: a “global technology platform”, its fulfillment network and in developing online businesses around the world.
Ashe said the global technology platform would look to improve the way its online business serves consumers. Building that platform would take “several years” but was necessary for Wal-Mart to compete with the likes of Amazon, he said.
Ashe said retailers faced a “binary commitment”. He said: “You either commit to being a tech company and you commit to the talent, the resources and the investment necessary to compete on technology that’s equivalent to Google, Amazon, Facebook or the others. Or you don’t. We’ve made the choice to do that.”
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataWal-Mart wanted to build a “faster, more efficient and more effective fulfillment network”, Ashe said. “How can we get this to you from raw material to wherever you want us to get it to faster, cheaper and more effectively than anywhere else?” He confirmed Wal-Mart will test the introduction of in-store lockers in some of its outlets to allow shoppers to pick items.
Outside the US, the retailer has an online presence in three markets – the UK, China and Brazil. Last week, Wal-Mart’s UK arm Asda said the focus of its investment has “shifted” to accelerating the expansion of its multichannel operations as it outlined plans for its online food business.
In China, Wal-Mart snapped up 51% of online retailer Yihaodian last year. Ashe said Yihaodian was “the fastest-growing e-commerce business in China” and added: “We’re really, really excited about the growth in China. Broadband penetration in China has passed the US and we expect that market to be a massive e-commerce player in the future.”
In the last six months, Wal-Mart has become the most-visited B2C site in Brazil, which Ashe called “an incredible story of growth”. He added: We are not the number one revenue player yet but we have made tremendous progress in the last six months.”
Wal-Mart faces stiff competition in each of these three international markets. In the UK and China, Tesco is an obvious rival. Last month, Tesco set a priority of “establishing multichannel leadership in all of our markets”. In Brazil, the country’s largest retailer CBD has a significant online presence.
However, Ashe said Wal-Mart planned to increase its investment in e-commerce to outpace the growth of the channel, which, he claimed, would benefit the wider business.
“You’ll never see the absolute dollar investment go down but you’ll see the percentage and impact on the company change and that will take several years. Our goal is to grow faster than the market, to expand margins and then obviously deliver our financial benefit to the company through market share and return on investment.”
