If any retailer thought that Wal-Mart would be contained to excel with brick-and-mortar, they were wrong. A recent report showed that Wal-Mart’s e-commerce investments are paying off. Global online sales grew 16% in the second quarter. E-commerce did however experience lower full-year earnings per share Wal-Mart will spend between $190 million and $295 million on e-commerce this year.
“Our primary goal is to continue to accelerate Yihaodian’s core e-commerce business and maintain strong local Chinese expertise,” said Neil Ashe, CEO of Wal-Mart Global e-Commerce. “Now that we are the sole owners, we will be expanding our leadership team from within the Yihaodian business, from within Wal-Mart and from the e-commerce industry in China. We will also leverage Walmart’s global reach and scale to better benefit Yihaodian, including global sourcing. China is an exciting, dynamic, large and competitive market. We are excited about our long-term opportunity in China.”
In 2012, an article on TechInAsia.com highlighted a quote regarding Wal-Mart’s ultimate plans for Yihaodians three years ago. “It’s not just online clout that has attracted the US retailer to the Chinese online store. Yihaodian, since its inception in July 2008, has built a sophisticated warehouse and distribution network covering much of the country so as to offer same-day or next-day delivery. Walmart, as one of China’s leading bricks-and-mortar supermarket chains – along with France’s Carrefour (EPA:CA) – will integrate some of its own logistics with Yihaodian’s.” It appears Wal-Mart’s strategy is coming full circle, as now the retailer owns Yihaodian.
Wal-Mart is set to duplicate in the US what is working in China, including probably Same-day delivery. Wal-Mart offers the service in multiple major US cities already and also competes with Amazon.ca, offering free same-day shipping in parts of Canada. With Amazon expanding same-day delivery at such a fast pace, Wal-Mart is in a position where it has to implement fast delivery on a broader scale, just as a number of physical store retailers are doing. Some retailers partner with a same-day courier like 1-800 Courier to deliver products from their stores within a matter of hours.
The retail leader will also have to look out because Amazon has announced free same-day delivery for Prime members. It included several major US cities, including the San Francisco Bay Area, Baltimore, Dallas-Fort Worth, Indianapolis, Phoenix, San Diego, Seattle-Tacoma, Philadelphia, Tampa, Washington DC, Boston, New York, and Atlanta. The launch involves more than 500 cities and towns, plus more cities to come.
The article also mentioned Wal-Mart opened two automated online fulfillment centers in the US, ready to meet customer needs for the holiday season. Both will be larger than 20 football fields. They will be the cornerstones of Wal-Mart’s fulfillment network, as well as two more centers this quarter. 1-800 Courier is a Philadelphia Courier with the national footprint needed to help Wal-Mart perform last-mile deliveries. Overall, same-day delivery will become more essential to continue to thrive online.
Reference: 8.18.15, www.internetretailer.com, Sandra Guy, Wal-Mart says heavy e-commerce investments put a crimp on earnings; 8.15.12, www.techinasia.com-Reuters, C. Custer, Walmart Now Owns a Controlling Share of Yihaodian