Skeptical voices chime in on Walmart’s eCommerce challenge

Walmart has been working overtime to convince retail analysts that its eCommerce division is finally ready to emerge from a string of failed initiatives which, as The Wall Street Journal notes, left the company playing “catch-up” with Amazon.com. According to the Journal, Amazon’s $61 billion in online sales last year dwarfed Walmart’s $7.7 billion. And despite Walmart’s recent investments on the technology side of things, Retailing Today says the gap “is wide and growing.”

So what’s the problem, exactly? It seems to boil down to this: Over the last 12 to 15 years, Walmart executives refused to invest in the kind of eCommerce-specific supply chain that made Amazon so successful. One effect of lagging investment is that it costs the company $2 to $3 more per parcel than Amazon to ship products to its online customers.

This is not just a cost problem, however, it’s also a customer service problem. Walmart customers may have to wait longer for their products to arrive. And the logistical bottlenecks mean Walmart cannot offer online customers as wide a selection as Amazon.

Bloomberg reporter Renee Dudley reported recently on one aspect of the selection problem – Walmart’s failure to match Amazon’s success at cultivating a network of independent merchants willing to sell products on its website. According to Dudley, Walmart had signed up six independent merchants to its online “Marketplace” after four years of trying, compared to Amazon’s two million.

Walmart does seem to be intent on catching up – the company has bought a small army of technology startups since it launched its new eCommerce development arm (called @WalmartLabs) in 2011. And executives are saying all the right things about their commitment to eCommerce.

As two articles in the current edition of Walmart Supplier News remind us, however, some skepticism is warranted. First of all, since 2000 the company has burned through a handful of eCommerce executives making big promises. And, secondly, because “the company discloses few substantive details about the performance of its e-commerce business,” it’s hard to tell the difference between rhetoric and reality.

What do you think?