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Wal-Mart beaten by Amazon despite spending billions

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Bloomberg

After spending billions on its web operations to take on rival Amazon.com Inc., the last thing Wal-Mart Stores Inc. wanted to tell investors was that online sales momentum was slowing.
Yet the world’s biggest retailer said that e- commerce sales rose only 8 percent in the fourth quarter. That’s down from 10 percent in the third quarter and 16 percent in the second.
The retailer attributed the deceleration to increased competition in the UK as well as economic downturns in Brazil and China. As for its domestic e-commerce sales, Wal-Mart would only say that its US online operations have grown faster than the companywide total. But with the retailer set to spend more than $1.1 billion this year on e-commerce, investors are getting impatient.
“Their eyes were very big, and you can’t necessarily blame them for Brazil or the UK or China, but they weren’t careful and conservative in their view of what e-commerce was going to do,” said Meredith Adler, an analyst with Barclays Plc.
She said Wal-Mart isn’t currently making a profit online and hasn’t indicated when it will.
Meanwhile, Amazon said last month that its retail sales in the fourth quarter increased 20 percent to $33 billion. For all retailers, online sales grew 9 percent to $105 billion in the holiday period, according to the National Retail Federation. Wal-Mart doesn’t disclose the dollar amount of its online sales.

Trailing Amazon
Despite Wal-Mart’s spending, the company still is falling short of Amazon on price and selection, said Guru Hariharan, chief executive officer of research firm Boomerang Commerce. During the holidays, Amazon was able to beat Walmart.com in key areas like electronics, toys and housewares, and Target Corp. also sold items for cheaper in some categories, he said. And Amazon had a significantly bigger selection than Walmart.com in every category Boomerang tracked.
“Why would I ever go to Walmart.com and shop there when I have lower prices on Amazon and a much higher assortment on Amazon?” Hariharan said. “Wal-Mart has to do some soul searching and figure out what it stands for. They aren’t going to be able to compete on lowest price and biggest selection anymore with Amazon.”

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