Feeling the Heat

The Financial Times revealed that Wal-Mart is planning “the creation of an -e-commerce platform that could sell groceries, general merchandise and digital products while linking its stores with call -centres.” This international e-commerce initiative is “aimed at securing billions of dollars of additional sales in countries including China, Japan and Brazil.”

While China and Brazil are currently strong markets for Wal-Mart, it’s unclear how Wal-Mart plans to capture the emerging online trend.  For example, in China the online auction site Taobao recently announced that its total sales volume exceeded the volumes of both Wal-Mart’s and Carrefour’s China ventures combined.  It’s difficult to imagine what Wal-Mart could offer to differentiate itself in a strong, established market - especially when Wal-Mart is increasingly being differentiated only by consumer mistrust and controversy.

Perhaps Wal-Mart should instead be concentrating its energies on offering quality products and customer service in order to reestablish consumer trust and confidence.  After all, home delivery of toxic goods isn’t much better than buying toxic goods in person. 

Wal-Mart in global online push [Financial Times]

Wal-Mart is to seeking to emulate Amazon’s global success, launching an international e-commerce initiative aimed at securing billions of dollars of additional sales in countries including China, Japan and Brazil.

The retailer is increasingly looking to overseas sales to offset slowing growth in the US, and says it will invest “millions of dollars” in what it labels “a multi-billion dollar opportunity over the next three to five years”.

A new global unit at Wal-Mart’s international division will oversee the creation of an -e-commerce platform that could sell groceries, general merchandise and digital products while linking its stores with call -centres.

In the US, Wal-Mart.com has estimated sales of more than $2bn a year and is the US’s most visited retail site after Amazon, the world’s largest internet retailer. In the UK, Wal-Mart’s Asda arm offers groceries, general goods and financial services online. In Mexico, its 63 up-market Superama neighbourhood stores also offer an online delivery service, including groceries.

But the retailer is now recruiting software architects and engineers to build what it calls a “globally scaleble” system that would essentially act as a kit of online parts - with elements such as data mining and customer analysis - that could be readily deployed in different markets.

Tesco, the UK retailer, has taken a similar approach in the international expansion of its physical stores, using a set of software applications nicknamed “Tesco in a box” that are adapted to different locations.

Amazon’s online sales outside North America - from five countries including China - accounted for 45 per cent of overall revenues of almost $15bn last year. Tesco, which sells online in the UK and Ireland, also operates an e-commerce site in South Korea, while Carrefour, the French retailer, sells groceries and general goods online in six cities in China.

Wal-Mart described the initiative as “an important effort for the company”, but declined to give further details. “The opportunity in this area is tremendous,” it added.

The move reflects growing interest among US retailers in the international possibilities of e-commerce, after an initial focus on expanding the US market. Online now accounts for about 13 per cent of total US retail sales excluding cars and groceries, according to Forrester Research.

Zia Daniell Wigder, an analyst at Jupiter Research, says that rapid growth of online users in Asia also means the “momentum is shifting” in global e-commerce.

Posted by Michael Mignano on Friday, February 01, 2008

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