Why Walmart can’t be compared to Amazon
Amazon.com and Walmart.com both sell products online, but that’s where the similarities end despite frequent efforts to compare the two.
The situation was evident again this week after a Wall Street Journal article highlighted some of the reasons why Walmart is less successful online than Amazon. The most obvious is the fact that Walmart plowed more than $100 billion into physical stores during the past 15 years while Amazon was focused on building a different type of distribution model. Then there was this headline from MarketWatch, "Why Walmart has fallen behind Amazon," which seemed to imply the companies had been equals at some point in the past.
That was never the case and isn’t likely to be any time in the near future as the gap between Walmart’s $10 billion in annual sales and Amazon’s $61 billion is wide and growing. Amazon.com now regularly exceeds 110 million unique monthly visitors while Walmart is generally in the 40 million range, but surpasses 50 million during the holidays. Walmart is investing considerable sums to address past digital deficiencies and has made e-commerce a priority, but it has a lot of priorities whereas Amazon tends to have just one.
Increased attention is being paid to Walmart’s e-commerce actions because the company has invited the scrutiny. It began disclosing sales last year and now Global e-Commerce president and CEO Neil Ashe regularly participates in presentations to investors where he has talked about e-commerce as the company’s next growth engine.
It is a comment reminiscent of one that former Walmart International president and CEO John Menzer made in the mid-90s. Back then Walmart had a small operation in China, Menzer opined that someday Walmart’s sales there could exceed those in the U.S.
He didn’t specify a timeframe and it could still happen, but as things stand now Walmart’s 4,000 unit U.S. division produces sales of about $275 billion and the 394 unit China division is nowhere close even if one were to assume those units average annual sales of $100 million.
As things stand with e-commerce, online sales now total about $10 billion and account for a little more than 2% of total company revenues of $469 billion. Ashe makes some compelling points about Walmart’s ability to leverage its unique assets and possessing a brand with the authority to sell everything to everyone. However, there is a tone of familiarity to his words, especially to anyone who has followed Walmart’s e-commerce efforts since the late 90’s.
Here’s what Retailing Today sister publication Walmart Supplier News had to say on the subject in its most recent issue in a piece headlined: "Digital deja vu."
Before Neil Ashe occupied the top job at Walmart Global e-Commerce, there was Eduardo Castro-Wright, Steve Nave and Raul Vasquez. And before them it was Carter Cast and John Fleming. And before all of them it was Jeanne Jackson who served as president and CEO of Walmart Interactive, as the online business was known when she was hired in early 2000.
Jackson joined Walmart at the height of the Internet bubble and her hiring was a big deal at the time. Walmart had just formed a joint venture with the venture capital firm Accel Partners to operate Walmart.com as an independent company and was intent on establishing a Silicon Valley presence. The addition of Jackson showed the company was able to recruit top talent as she walked away from her role as CEO of Gap’s Banana Republic division. Walmart was eager to showcase its new hire so just two months after joining the company she was thrust on stage at the company’s shareholders’ meeting to share her digital vision.
It may have been 13 years ago, an eternity in the digital world, but her comments and those made by former president and CEO Lee Scott, ring true today and sound remarkably similar to Ashe’s vision.
"Our commitment on e-commerce is that we will spend both the financial resources and human resources to ensure that as the industry grows we will have our rightful place in that industry just as we do in bricks and mortar," Scott said at the time. "You know what our position is here, so I think you should have a clear understanding of what we think our position should be there."
Jackson talked about Walmart’s potential for e-commerce to transform retail and the company’s limitless possibilities, even if others didn’t see it that way. The company was taking flak at the time for being a retail dinosaur whose demise at the hands of digital upstarts was inevitable.
As Jackson concluded her remarks, she hoisted a pink lunch box that had been brought on stage earlier and used it to make the point that Walmart was going to do just fine against the new breed of competitors.
"I’m here to tell you they haven’t eaten it yet and we don’t intend to let them," Jackson said, referring to the still intact contents she revealed to the 15,000 attendees at the meeting.
Jackson’s career at Walmart.com was short lived. She left the company after only 20 months.