Maybe the biggest question around the news that Wal-Mart Stores is dramatically upgrading its e-commerce site is, why did they wait so long to make such a serious run at Amazon?
The Associated Press reports that the Bentonville behemoth is working to improve personalization on its site, which offers seven million products, by tailoring recommendations based on a consumer s shopping history, his or her location and the weather outside.
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Time will tell how successful walmart.com is at achieving its goal, but there is no debate that such true personalization is the holy grail for online retailers. The term personalization has been around for years and its meaning has been diluted by efforts that call themsevles personalization, but fall far short of the ideal, as Tina Johnson-Marcel points out in her post on MarketingProfs.
To answer my own question, there are no doubt a number of reasons that Wal-Mart has concluded that now is the time to go all-in on digital commerce. (For a look at other changes in the works, see this The Wire story.) For one thing, the world s biggest retailer has a relatively new CEO, Doug McMillon, who has focused on competing with online leader Amazon and has pushed hard to upgrade e-commerce.
Doug isn t there to make next quarter or next year s earnings, Wolfe Research analyst Scott Mushkin told the Wall Street Journal last month. He s there to try to bring Wal-Mart into the 21st century.
And in fairness, it s not as if Wal-Mart just woke up to the notion that digital commerce is fast becoming a much more significant slice of the revenue pie for retailers. The retailer has been working for years on beefing up its online offerings, launching @WalmartLabs in Silicon Valley more than three years ago. Last year alone, Wal-Mart spent $500 million on e-commerce initiatives and it plans to spend another $150 million this year.
In fact, Wal-Mart executives have pointed to the Silicon Valley effort as a sure sign that the company is up to the technological task of competing at a high level in e-commerce. Consider the recent comments to shareholders by Neil Ashe, who heads up e-commerce for Wal-Mart:
You hear a lot these days about cool and interesting companies in Silicon Valley. Let me tell you about one — a tech business, . This business does a lot of inventing. In the past two years, it has filed for more than 300 patents. Some of the best technologists in the world are joining this business. Almost a thousand joined last year: in Silicon Valley, Sao Paulo, Shanghai, Bangalore, and other cool places around the world. This business is growing. Last year, its sales reached $10 billion. This year, it s forecasting sales to reach $13 billion, which is similar to the size of Visa or Nordstrom. This business is also expanding around the world. In Asia, Africa, Europe, Latin America, and North America. Now it might surprise you to hear that this business … is Walmart. That s right. Walmart is one of the fastest growing e-commerce businesses in the world.
And no doubt Wal-Mart and others see this as the time to upgrade the e-commerce experiences they re offering consumers because the technology now exists to build true personalization into websites and mobile sites. Speaking at a Churchill Club event earlier this summer, Ratnakar Lavu, Kohl s executive vice president of digital innovation and information technology, underscored the point:
I do think for the first time, actually, the technology is there. Whereas if you d asked the traditional retailers in the past, like five years ago, we would have said, Absolutely not. But with all the Hadoop infrastructure, and all that are now part of the open-source community, we re now able to actually analyze large sets of data. We re able to build predictive algorithms. I can do real one-to-one experiences.
That means, as the the Associated Press story about Wal-Mart s web upgrades points out, that retailers simply cannot stand pat on their digital initiatives:
The move to personalize websites for shoppers has become a top priority for traditional brick-and-mortar retailers like Wal-Mart as they play catch up with , the online king that pioneered customizing content for shoppers. Retailers increasingly are trying to use their reams of customer data they get from mobile devices and computers to personalize their websites and ultimately, boost sales.
Other retailers, including home-improvement chain Home Depot and office-supplies retailer Staples, have been working to personalize the online shopping experience. In fact, a quarter of customers who visit Home Depot s home page see product recommendations that are based on recent purchase or browser history, according to the company.
Wal-Mart s efforts so far appear to have paid off. Last year, Wal-Mart s online sales growth, which was up nearly 30 percent, actually beat out Amazon, its unrivaled rival. Amazon s sales were up about 20 percent during the same period. That was the good news for Wal-Mart. The less positive statistics? Amazon s online revenue was $67.8 million, more than six times Wal-Mart s Internet sales of $10 billion.
And, of course, Amazon isn t sitting still while Wal-Mart adds to its online empire. That s not the way the Internet economy works, is it? Every day is a race to the top, whether you re the reigning champ, the current also-ran or an enterprise that few have even heard of — yet.
Mike Cassidy is BloomReach s storyteller. Reach him at mike.cassidy@bloomreach.com and follow him on Twitter at @mikecassidy
At top: A Walmart employee works at an online fulfillment center. (Walmart/Mike Gibson Photo)
