Executive Briefings

Wal-Mart's Rocky Path from Bricks to Clicks

Since Wal-Mart Stores first ventured into cyberspace 15 years ago, the company has struggled online. Early on, Walmart.com featured a clunky digital version of the greeter who welcomes shoppers at each store. Even in the Web's early era of gaudy design, it was widely mocked, an off-key note that hinted at the company's inability to grok the internet. Walmart.com still doesn't excel at features that are commonplace on other major e-commerce sites, such as personalization and recommendations. The company doesn't disclose its online sales, but analysts say Walmart.com does about $6bn a year in business, less than 2 percent of total sales and well below Amazon.com's $34bn in 2010 retail revenue.

For a long time, Wal-Mart's poor online performance didn't much matter. The retailer built hundreds of Supercenters every year in the late 1990s, and profits and revenue soared. Over the past two years, however, the company has cut its new U.S. store development by half. Sales at domestic Wal-Marts open for at least a year have declined in each of the last eight quarters. Over that time e-commerce has exploded, even among the lower-income households that are Wal-Mart's core customers. "It's the perfect storm," says Dale Achabal, executive director of the Retail Management Institute at Santa Clara University.

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Since Wal-Mart Stores first ventured into cyberspace 15 years ago, the company has struggled online. Early on, Walmart.com featured a clunky digital version of the greeter who welcomes shoppers at each store. Even in the Web's early era of gaudy design, it was widely mocked, an off-key note that hinted at the company's inability to grok the internet. Walmart.com still doesn't excel at features that are commonplace on other major e-commerce sites, such as personalization and recommendations. The company doesn't disclose its online sales, but analysts say Walmart.com does about $6bn a year in business, less than 2 percent of total sales and well below Amazon.com's $34bn in 2010 retail revenue.

For a long time, Wal-Mart's poor online performance didn't much matter. The retailer built hundreds of Supercenters every year in the late 1990s, and profits and revenue soared. Over the past two years, however, the company has cut its new U.S. store development by half. Sales at domestic Wal-Marts open for at least a year have declined in each of the last eight quarters. Over that time e-commerce has exploded, even among the lower-income households that are Wal-Mart's core customers. "It's the perfect storm," says Dale Achabal, executive director of the Retail Management Institute at Santa Clara University.

Read Full Article