Low-Price Pioneer Walmart Struggles to Compete Against Amazon

Walmart, the country’s largest brick-and-mortar retailer, has been in business since 1962. The company has a market cap of about $300 billion and more than $514 billion in annual sales.

Yet Walmart can’t compare with profit success of Amazon.

Amazon commands more than 38% of the U.S. e-commerce retail market. Walmart barely holds 5% of that market.

Since 2016 Walmart has made some questionable business moves to expand its brand in the e-commerce market, moves that has cost the company considerably.

The Arkansas retailer is expected to lose more than $1 billion in connection to its online e-commerce services. This is projected to occur even with an estimated revenue of $22 billion.

Although this is not a lot of money to lose, relatively speaking, for a corporate behemoth, the company stands to lose time catching up to Amazon. E-commerce is undoubtedly the future of retail.

In 2016, Amazon commanded 32% of the e-commerce market. If Walmart doesn’t catch up and innovate Amazon could consolidate its standing as the go-to name consumers think of when it comes to e-commerce.

Walmart stock has surged by 53% and its e-commerce section increased revenue by 40% since 2018. The company is doing well, just not well enough to rival Amazon or other growing e-commerce businesses.

It’s difficult for a brick-and-mortar corporation to transition into an e-commerce entity. Walmart would have to spend untold billions to build from scratch the e-commerce warehouse distribution and delivery system that Amazon has built and perfected for over 20 years.

Jet.com

In an effort to catch up, Walmart bought Jet.com, a startup e-commerce site, for $3.3 billion in 2016. There were no other bidders for Jet.

According to an article on Recode, numerous Walmart insiders blame Jet management for the inability of Walmart to gain ground on the e-commerce market.

At the time of its acquisition by Walmart, Jet was barely a year old and not profitable.

Jet.com was expected to help Walmart get exposure to millennials and urban shoppers who prefer e-commerce. Although Jet.com boasted more than $1 billion in revenue in 2016, that number declined precipitously to $689 million in 2019.

More than 5% of Americans shopped at Jet.com in 2016. Only 2% do so now, in 2019. Insiders wonder that if the company can’t make Jet.com a success, how can Walmart conquer e-commerce otherwise?

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