Online initiatives expand beauty, OTC
BENTONVILLE, Ark. Amazon.com.—A reputation for low prices and a broad assortment of merchandise enabled Walmart to become a dominant retailer, and now that same strategy is playing out online, where the retailer is intent on overtaking
A series of recent moves—the most significant of which from the perspective of the chain drug industry involved the addition of health-and-wellness products to the online product mix, coupled with increased healthcare content—have Walmart pointed in that direction and talking tough about overtaking the online leader. “Our goal is to make Walmart.com the most visited and valued Web site that exists,” Raul Vasquez, CEO of Walmart.com, told members of the financial community in late October during the retailer’s annual investor conference.
The wide range of products added to the mix in health and beauty and nonprescription drug categories are available for shipment directly to customers’ homes with flat rate pricing of 97 cents. The initiative could help Walmart attract online customers in urban areas who don’t have convenient access to a physical store.
In another move earlier this year, the company created a concept called Marketplace, where it partnered with three other retailers to add more than 1 million items to the online assortment in such categories as home, baby, apparel, toys, sporting goods and sports memorabilia. More partnerships are planned for the coming year, Vasquez said.
“We’re simply trying to provide more products to the customer,” Vasquez said. “In stores, we’re very focused on maximizing the productivity. Online, you don’t necessarily have the same constraints, so you can go about that slightly differently.”
Walmart’s increased online activity comes as Amazon.com is achieving record results, with third-quarter sales that increased 28% to $5.5 billion, and profits that grew at 68% to $199 million. The same day that Amazon.com reported those figures, Walmart was in the midst of its analysts’ meeting, and Vasquez let it be known during his presentation that Walmart.com was outperforming Amazon.com.
“If you talk about just year-to-date, and you take the leading online company—a company that all of you would be familiar with—and you look at what their growth rate has been in North America, year-to-date, we have been able to grow at 190 basis points faster than that company,” Vasquez said. Such cryptic references provide insight into the online growth rate, but the data point is of little value without knowing the size of the base business, a figure Walmart has yet to disclose publicly.
Another interesting piece of information Walmart provides regarding its online business is the strong appeal of its Site-to-Store free shipping service. According to Vasquez, 40% of orders placed online are now picked up in stores. Walmart sees a bright future for the service, as evidenced by the fact that new and remodeled stores now feature a reconfigured customer service area with space at the front of the store designated for Site-to-Store order pickups. Experiments also are under way with drive-through order pick-up capability.