Walmart seeks online growth

12 October 2012

NEW YORK: Walmart, the world's biggest retailer, is ramping up its focus on ecommerce, an area which is currently a small, but rapidly-growing, source of sales.

The company hopes to generate $9bn in online sales by the close of its next fiscal year. Total revenues for the organisation's last financial year hit $444bn in 2011.

"I believe we are playing to win in a very real way now – driving innovation, working together across the entire business and investing in our vision," Mike Duke, Walmart's CEO, said at a meeting for investors. "Our efforts are strengthening an already good business."

The Arkanas-based firm established a new digital unit, @WalmartLabs, in April 2011, which subsumed various start-ups it had acquired in this space, such as Kosmix, OneRiot, Grabble, Small Society.

"This has ... been an important year of progress for us,"  said Duke. We've assembled best in class teams in Silicon Valley and around the world."

A new search engine developed for, called Polaris, helped improve conversion rates by 10% to 15%, and it is now building a global platform that "significantly increases" the assortment on sale.

Further enhancing its presence, Walmart will invest most heavily in the four markets it thinks boast the "greatest growth potential", in the form of Brazil, China, the UK and US.

Such expenditure will include developing apps for both mobile and social media. Big data is also set to play an increasingly central role in decision making, while social analytics inform buying and merchandising.

Walmart has already taken a 51% stake in Yihaodian, a Chinese online retailer with 24m registered users, and offers same-day deliveries in Shanghai, Beijing, Guangzhou, and next-day services to 40 cities.

According to McKinsey, the management consultancy, global ecommerce sales should reach $1.3tr worldwide by 2015, compared with a total of $300bn just ten years earlier, indicating the scale of the opportunity.

"I feel even more strongly today that our trusted brand, our relationship with over 200m customers, and our operations in communities where those customers live and shop, position us very well in e-commerce," Duke said.

"Our strategies are creating an anytime anywhere relationship with our customers that will allow us to serve them better than any other retailer," he added. "In this changing landscape of commerce around the world, I truly believe that we will continue to be the healthiest and best-positioned global retailer."

Data sourced from Walmart/Reuters; additional content by Warc staff