Why does Walmart attract a small number of customers

On all fronts: Walmart is arming against Amazon

Walmart wants to know. The world's largest retailer invests in its online expertise. He is rapidly buying up online retailers, expanding a click-and-collect service and testing a food delivery service. In this way he gains access to new groups of buyers, e-commerce know-how and sends Amazon a declaration of war.

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Walmart Stores Inc., Arkansas, has been on a shopping spree for several years. The stationary giant is gradually gaining more weight in the online market - a showdown with Amazon. What seems like a wild gathering gets a system. With the acquisition of companies, Walmart not only buys online sales, but also access to a wealthy clientele and know-how. The shopping list in the last 9 months alone: ​​online department store jet.com in 2016, outdoor mail order company Moosejaw and trendy fashion shop Modcloth.com in the first quarter of 2017. In focus: the trend shop for men's fashion bonobos.

"We're pretty active right now."

Marc Lore, e-commerce boss at Wal-Mart

So far, Walmart has been a shoppers' paradise on a tight budget. With this image, however, the company does not reach the millennials with the well-padded credit cards. "A Herculean task to introduce Walmart here," explains retail expert and author Stephen Doug in the online magazine retaildive. Walmart's brand image is so strong that it runs the risk of losing its loyal buyers if it now looks for other groups of buyers. That's a problem.

E-commerce grows and grows

In the USA, traditional retail is growing by less than 2 percent per year, forcing some retailers to give up. E-commerce, on the other hand, is pulling away with an annual rate of increase of 16 percent. Amazon above all shows how successful e-commerce works. So what choice does Walmart remain?

"We're lagging behind and we have to catch up. We have a few big projects in the works."

Marc Lore, e-commerce boss at Wal-Mart

With its aggressive buying strategy, the company wants to keep pace with the shift in shopping behavior from stationary to digital retail - if it takes Amazon's shares, so much the better.

What happened until now

Walmart's former e-commerce boss Neil Ashe bought more than a dozen small, struggling e-commerce companies in the early 2010s. With this, Walmart made a fresh, e-commerce-loving impression and at times drove its share price up. Online sales reach a share of 3 percent. Nothing else happened at first.

Millennials, we are coming!

The motto now is to tap into other groups of buyers without annoying loyal customers. Unfortunately, top brands like Nike don't want to sell their products through a discount retailer like Walmart. The low-budget image of Walmart is also a problem for the new hip brands. The latest acquisitions are set to change that. Millennials have new favorites in the brand sky and Walmart is worth taking a closer look at.

Know how included

In August 2016, the company surprised people by acquiring jet.com for $ 3.3 billion. Jet.com? The digital department store was launched in 2013 by Marc Lore and one year later it is one of the fastest growing internet shops - motto: low prices, fast delivery, satisfied employees - writes the NYT for Christmas 2015. Jet's dynamic pricing system is outstanding. com. For example, the retailer promises his buyers to benefit from logistical advantages, so that the shopping basket price drops if a number of products are bought together. In 2016, Walmart is interested in the newcomer and in its founder. In 2005 he founded Quidsi, an e-commerce platform for baby care, household goods and cosmetic products, which he sold to Amazon in 2010, worked there for a few years before collecting venture capital again and starting his start-up jet.com. Now, with the takeover, Marc Lore will also join Walmart and henceforth determine the company's digital strategy as E-Commerce boss.

New shopping concept

Companies that stand out in digital retail are essentially just as outstanding tech companies as retailers - that means Walmart also buys in excellence in technology.
In the Walmart shopping basket
  • August 2016 jet.com - Investment 3.3 billion US dollars
  • January 2017 shoebuy.com - estimated investment 70 million US dollars *
  • February 2017 Outdoor retailer Moosejaw - investment 51 million US dollars
  • March 2017 ModCloth - investment 75 million US dollars
  • Still open: Bonobos, trendy men's fashion - an estimated investment of 300 million US dollars
However, they are all buying small businesses. There are slight doubts as to whether they can bring about the desired major changes or whether more determined investments should not be made.

Distance to Amazon

Today, Walmart is the second largest online retailer after Amazon, albeit by a considerable margin. Amazon had around 94.7 billion US dollars in sales in 2016, according to Oregonlive.com, Wal-Mart reached 14.4 billion US dollars (with total sales: 482 billion US dollars). Amazon doesn't just sell products. It achieved total sales of 136 billion, including through services such as premium memberships. "Highlighting and selling the benefits of this membership is what Amazon does really well," said Stephen Beck, founder of the management consulting firm Cg42, to oregonlive. "Walmart is a retailer, but Amazon is more."

Closing skills gaps

The new additions are said to bring the company from Arkansas the lack of e-skills with them.
1. With jet.com, Moosejaw and Modcloth, the image problem is avoided and Walmart can attract a new demographic league as customers without them knowing that their dollars will end up in Walmart's coffers.
2. With jet.com comes the dynamic shopping cart know-how,
3. Moosejaw contributes competence in matters of mobile marketing,
4. Modcloth shows how user-friendly content can look today and how customers get temporary stationary shops,
5. Bonobo would bring along a showroom store concept.
Walmart is convinced that everything will be topics of the future.

"We believe that the future of retail is a mix of brick-and-mortar, online and mobile shopping that seamlessly merges and allows customers to shop exactly where and how they want."

Ravi Jarwala, Wal-Mart spokesperson

Walmart is currently in pole position for this omnichannel consumption forecast. There are 4,700 stores in the US, which - according to Walmart - are within 5 miles of reach for 70 percent of the population. It already offers a selection of two million products online, free shipping for purchases of $ 35 or more, and guaranteed delivery within two days - just like at jet.com.
Goods ordered online can be picked up at 4,700 Walmart locations.

Expansion of omnichannel

It goes on. April 19, 2017 was the cut-off date for another “Pickup discount” offensive that will hit Amazon hard: A click and collect service combined with a discount system. Anyone who purchases online and picks up the product at one of the 4,700 locations receives a reduction that varies depending on size and value.

Walmart to Offer Discounts for Online In-store Pickup Orders

For a flat screen that costs around US $ 1,700, the discount is around US $ 50; for a Lego toy that costs around US $ 24, the reduction is around US $ 2.55. To start with, the Pickup Discount range includes 10,000 items, and by the beginning of June it should be 1 million. Restriction: Discounts are only available for products that are not in the stationary Walmart range.

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Walmart is already there

In another area, Walmart is already ahead and does not want to be taken away from it. "The battle for online market leadership in food has not yet been decided," observes e-commerce analyst Yoram Wurmser.
Walmart Grocery App - live since the end of April 2017.

The facts: the retailer knows his way around groceries very well - and consumers know him - a trust advantage. A click and collect service for groceries is already available at 600 locations in the USA, and there are expected to be 500 more this year. To round off the service, the “Walmart Grocery” app went online at the end of April.

Delivery under test

A delivery service is currently being tested at several locations. "If Walmart can offer simple and affordable conditions for the last mile, it will jump ahead of Amazon when it comes to food delivery," Businessinsider.de quotes a Barclay analyst.
Amazon is expanding its food delivery service.

Amazon is stepping up

The onliner initially started the Amazon fresh delivery service in 2007 and now wants to move into stationary versions. The internally named "Project Como" provides for Click & Collect or Drive in possibilites - in Seattle a prototype is to be launched, according to the assumptions of the Wall Street Journal at the end of 2016.

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