For almost a decade, Wal-Mart Stores (WMT, news, msgs) has been boasting that it will dominate Internet retailing the way it dominates strip malls, toppling Amazon.com (AMZN, news, msgs) as the world's largest online merchant. And every year, those boasts have proved hollow.
But this holiday shopping season, Wal-Mart has started aiming at what it sees as Amazon's Achilles' heel: the costs and delays of shipping online purchases to buyers.
Customers who buy some of the more than 1.5 million products on Walmart.com can have them shipped free to a local Wal-Mart, where new service desks at the front of some stores make it easier for shoppers to retrieve their stuff. On the outskirts of Chicago, it is testing a radical new concept: a drive-through window, similar to those found at pharmacies and fast-food restaurants, where shoppers can pick up their Internet orders.
"There was a time when the online and offline businesses were viewed as being different," Walmart.com CEO Raul Vazquez said. "Now we are realizing that we actually have a physical advantage thanks to our thousands of stores, and we can use it to become No. 1 online."
Heading into Christmas, the company said 40% of its online orders are being delivered through stores.
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On top in traffic
Walmart.com now ranks among the top e-commerce sites in traffic, according to comScore's tracking service. But with just $1.7 billion in annual sales, according to estimates by trade publication Internet Retailer, it badly trails Amazon, which reported $19.17 billion in revenue last year.Of course, store pickup of Internet purchases is not a totally new concept. Consumer electronics retailers helped pioneer store pickups of online orders at the start of this decade, and other companies have been offering it for years. But Wal-Mart and other old-school retailers are sharply increasing efforts to link stores and Web sales as a broad shift to Internet shopping is gaining momentum in the bad economy.
While e-commerce represents less than 5% of American retail spending, merchants are finding that even technologically unsophisticated consumers start their shopping on computers or mobile phones, perusing product reviews and price comparison Web sites.
ComScore said total online orders rose 3%, to $19.9 billion, from Nov. 1 through Dec. 11 compared with the same time a year ago.
Wal-Mart is marshaling its distribution might to help Walmart.com better compete with online sellers.
Among the converts is Doreen Bandy, a 29-year-old sales executive from Long Beach, Calif. For the past three years, she has been an enthusiastic member of Amazon Prime, a program that provides Amazon customers free two-day shipping and other privileges in exchange for a $79 annual fee. Still, she said that if she sees the same clothes at a local Nordstrom mall store, she buys them there.
"It's about timing and convenience," Bandy said.
Continued: Advantages to shipping
