Wall Street considered almost all the news from Wal-Mart Stores Inc.’s (NYSE: WMT) earings as bad. U.S. comp sales declined 1.4% in the 13-week period from Jan. 26 to April 26, 2013, something that has not happened in years. Revenue was higher by only 1% to $114.2 billion.
However, buried in the earnings release was good news about e-commerce. Walmart’s online sales rose more than 30%. In its most recently reported quarter, e-commerce giant Amazon.com Inc. (NASDAQ: AMZN) boasted its revenue was up 22% to $16.1 billion. Based on those statistics, Walmart has become a force to be reckoned with in online retail sales.
Walmart’s e-commerce revenue is only 10% of the company’s total. However, that puts the number at more than $40 billion. Obviously, Walmart’s disadvantage is that it owns stores, a problem that is impossible to underestimate as it tries to crawl out of a period of flat revenue.
Walmart does have several critical advantages in its online business. The first is clearly brand recognition. Amazon may be universally known as the e-commerce leader, but Walmart’s brand is as visible as nearly any in the United States, and to some extent overseas.
Walmart also has the second largest online web property in the United States, according to research firm Comscore. Walmart sites had 41 million unique visitors in March. Amazon had 121.4 million. The gulf is tremendous, but Walmart has some means to close it, at least when the spotlight returns to the advantage of its huge overall revenue.
Walmart has begun to do some things that should increase online sales impressively, some of which leverage its store base. Buyers can order online and pick up merchandise at stores. Amazon cannot nearly match that. Walmart also has moved toward same-day delivery of goods ordered online. Amazon has started to do the same. Walmart may not be ahead in this critical race, but is not behind.
Many analysts believe that Amazon’s real advantage has been the creation of its Kindle line. The tablets range from e-readers to modestly powered PCs. The electronics help Amazon boost online sales, particularly of digital media products. Walmart cannot match the Kindle program. It might however, form a strategic alliance with another maker of tablets. Troubled Apple Inc. (NASDAQ: AAPL) comes to mind.
Walmart may be behind Amazon in e-commerce. That does not mean the world’s largest retailer cannot make substantial gains.