Hardware Retailing

AUG 2017

Hardware Retailing magazine is the pre-eminent how-to management magazine for small business owners and managers in the home improvement retailing industry.

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HARDWARE RETAILING | August 2017 60 Taking on the Web Giants In contrast, Walmart is transitioning away from growing its brick-and-mortar presence, and instead will focus on developing its e-commerce, according to the company's 2017 annual report. To anyone who has been paying attention to Walmart's acquisition activity over the past two years, this transition is not new. In July 2015, the massive retailer bought the remaining shares of Chinese e-commerce company Yihaodian for an unspecified sum. Walmart had already owned half of Yihaodian, and said it intended to invest up to $1.5 billion in global e-commerce development, which included the rest of Yihaodian,The Wall Street Journal reports. In August 2016, Walmart announced its acquisition of Jet.com for $3 billion in cash and $300 million in Walmart shares. At that point, Jet was "among the fastest growing and most innovative e-commerce companies in the U.S.," according to Walmart. Walmart's purchases didn't stop there. During the first half of 2017, the retailer announced acquisitions of three online apparel retailers for a combined sum of about $436 million: Moosejaw, an outdoor clothing retailer with a "large web presence" and 10 retail stores (February 2017); ModCloth, a women's apparel and accessories online retailer (March 2017); and Bonobos, an online menswear seller (June 2017). Beyond Acquisitions The acquisitions do not represent a complete transition in focus to e-commerce, but Walmart's other activities show that the retailer is cognizant of the multilevel competition Amazon poses. In 2015, Walmart launched an online membership program called ShippingPass, which was comparable to Amazon Prime, according to Business Insider. For an annual fee, customers could order products online and have them shipped to their homes for no additional shipping charge. At $49, Walmart's program was about the half the annual cost of Amazon Prime. In mid-2016, Walmart announced ShippingPass customers would receive two-day shipping instead of three to further compete with Amazon's similar service. In early 2017, Walmart canceled ShippingPass in favor of extending free two-day shipping to all customers whose purchases total $35 or more. "It no longer makes sense to charge for [two-day shipping]," says Marc Lore in a press release from Walmart. The co-founder of Jet.com is president and CEO of Walmart's U.S. e-commerce business. He joined Walmart when the retailer acquired Jet.com, which he developed after he left Amazon. Walmart continues to innovate and grow its fulfillment, delivery and in-store pickup operations. The retailer increased its number of large distribution centers dedicated to online orders from five to 10 in 2016, according to a Reuters report. The retailer has 100 smaller e-commerce centers dedicated to packaging and shipping online orders, and also uses about 80 retail stores as fulfillment and shipping centers, Business Insider says. In comparison, Amazon has about 180 fulfillment centers in the U.S., Business Insider reports. Walmart recently announced that store associates can choose to deliver online orders for extra pay, providing another method for customers to get their Walmart purchases quickly. Walmart's 4,672 stores in the U.S. give the retailer an advantage when offering in-store pickup. The retailer recently introduced pickup towers, or kiosks, inside stores. To get online orders, customers scan receipts on their smartphones, and a pickup tower delivers the order within 45 seconds. According to Business Insider, the towers' compartments adjust to accommodate various package sizes, which make them more versatile than the order pickup lockers that Walmart and Amazon have both used. According to Walmart, 90 percent of the U.S. population lives within 10 miles of a Walmart store, making online order pickup a viable solution for many. Walmart

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