The next big wave of Walmart’s eCommerce business may not come until after Amazon takes control of its brick-and-mortar business, according to an analyst.
Walmart has been ramping up its online store operations as it tries to win back shoppers and win back customers in an increasingly competitive marketplace.
The company recently purchased Target, a big online retailer, for $2.6 billion.
While the deal will likely provide some of Walmart is e-Commerce business, the acquisition could still cause some challenges.
For one, Target’s business is largely based on online orders and sales and it may be harder for Walmart’s digital business to survive under the new ownership.
Walmart is also competing against Amazon’s massive e-book and audiobook business, which has more than doubled in size in the past three years.
Walmart could also face some challenges in selling online through its website, since many retailers don’t offer a unified e-store platform like Amazon does.
“If you’re an Amazon customer, the ability to shop across all of your categories is going to be incredibly challenging,” said Peter Wehner, a research analyst at eMarketer.
“In contrast, Walmart has its own e-shops.
If you’re a Target customer, you don’t need Amazon to be able to shop.”
In other words, if Walmart is going digital, it may not have a seamless path to a seamless e-shop experience, but it could still make a significant dent in e-sales.
“They may not go digital in a traditional sense, but they’ll be in a new kind of digital e-stores that will be more focused on selling on Amazon, and less focused on being a traditional e-retailer,” Wehner said.
Walmart’s plan to sell online was initially announced in November, when the company announced a plan to create a new digital-retailing unit.
The acquisition will be a boon to the company if it can expand its e-business, since the company is looking to compete with Amazon’s online sales and its own brick- and-mortars.
“We believe that this acquisition will allow Walmart to continue to expand our e-marketplaces and grow our business to meet the demands of an ever-expanding consumer and business,” Walmart chief financial officer Peter C. Mullen said in a statement.
“With the acquisition, we have made the necessary investments in our eCommerce operations to build our own eCommerce platform and ensure our continued growth.”
Walmart already has a thriving online e-mail and mobile apps business, and Mullen says the company plans to “develop additional e-grocery offerings.”
“We have also focused on strengthening our retail channels, particularly online and mobile,” Mullen added.
Walmart bought Target because it had an “unmatched” e-waste management capability, Mullen told investors in November.
The retailer had a huge online presence that was able to handle a huge volume of e-labor, but that has since declined, with Walmart’s online business now struggling with e-delivery and e-tailers, according the company.
“Target’s growth has been more and more driven by the delivery side of its business, where its ecommerce platform has struggled, and it has had to turn to other businesses for those deliveries,” Mullens said at the time.
“That has created a challenge for Walmart.
Now, Target has to compete head-on with Amazon in a global e-Retail marketplace.”
Wehner pointed out that Walmart also could face challenges with its online payments business, especially if Amazon decides to move online payments to its own payment network, the PaymentCardPlus.com.
“Amazon has built a strong platform, but there are a lot of unknowns there,” he said.
“PaymentCardPlus is a strong company with a strong e-wallet infrastructure.
It’s been doing very well for Walmart, but if Walmart gets a foothold in its ePayment system, they could end up facing a lot more competition from Amazon.
The combination of Amazon and Walmart’s ability to get into eCommerce could create an opportunity for Walmart if they do decide to expand their online eCommerce capabilities.”
Walmart’s move to Amazon could also impact its eCommerce efforts.
“Walmart could also see some competition from other retailers, as the other retailers will want to move their eCommerce businesses online,” Weyer said.
For example, Target, which now has nearly 6 million customers online, may not want to compete directly with Walmart, since it may need to offer an e-payments service.
“The other question would be whether Walmart would be able or willing to partner with other retailers on the platform, such as Target,” Weaker said.