In the hard-fought world of online retail, Wal-Mart has finally
notched a win against rival Amazon: For the first time in a decade
Wal-Mart's Web sales grew faster than the online retailing
giant's.
Global Internet sales at Wal-Mart Stores Inc. rose by 30% to $10
billion during the year ended Jan. 31, surpassing Amazon.com Inc.'s
20% sales growth during the year ended Dec. 31, according to data
from trade publication Internet Retailer.
Amazon still dwarfs Wal-Mart's Web sales in scale. Amazon's
online sales of $67.8 billion of electronics, media and other
products last year are more than six times bigger than
Wal-Mart's.
Last year, Amazon sold more than its next 10 biggest competitors
combined, including Apple Inc., Wal-Mart and Staples Inc. Amazon
declined to comment.
Wal-Mart is intent on catching up with Amazon. To that end, the
retailer is buying up e-commerce businesses. On Tuesday it is
expected to announce the purchase of Adchemy, a search-engine
marketing company that helps retailers optimize their use of search
terms. It marks Wal-Mart's 12th e-commerce acquisition in three
years.
Wal-Mart has spent heavily to boost its online presence. In the
year ended Jan. 31, it plowed roughly $500 million into e-commerce
investments, including opening three new online fulfillment centers
in Texas, Pennsylvania and Brazil and hiring 1,000 employees in
Silicon Valley.
In the U.S., it is currently testing same-day delivery and
online grocery ordering in various markets, as well as expanding
online offerings such as car insurance.
With Adchemy, Wal-Mart plans to take on about 60 employees,
though not its founder Murthy Nukala. "We get to go faster as a
result of them being part of our team," said Neil Ashe, chief
executive of Wal-Mart's global e-commerce division, in an
interview.
Mr. Nukala said the acquisition would help Wal-Mart boost its
e-commerce business but that he didn't want to come along because
after "a number of years in the entrepreneur saddle, I just needed
time to recover and recuperate."
In January, Mr. Ashe predicted the world's largest retailer
would be able to match Amazon's range of products and quick
shipping times within two years. In February, Wal-Mart told
investors it planned to spend an additional $150 million on
e-commerce investments and reach $13 billion in online sales this
year, another 30% increase.
Online sales were around 2% of Wal-Mart's nearly half a trillion
dollars in revenue last year.
Its e-commerce operation represents its fastest-growing business
and helped Wal-Mart increase total sales last year in what was an
otherwise weak year.
Wal-Mart has had its eye on Adchemy for several years, and
decided a month ago to pursue the deal, Mr. Ashe said, declining to
disclose the terms of the transaction.
Adchemy, which attracted nearly $120 million from investors like
Microsoft Corp., Accenture LLP and August Capital since 2004,
failed to turn a profit last year.
The company has worked with retailers like Macy's and the Finish
Line to boost sales by using the right search terms on Google and
Amazon to help shoppers find what they are looking for faster. For
instance, if shoppers type "cheap headphones," the retailer would
be able to display headphones in the $5 to $10 range, rather than
just matching the word "cheap."
The Bentonville, Ark., company is also intent on using Adchemy's
technology to beef up its own search page to compete with Amazon
and Google which are locked in the fight to be the first search box
shoppers go to when looking for products online.
Customers that come directly to its website to search for
products are more likely to buy the items, compared with shoppers
that reach walmart.com through another search engine, Mr. Ashe
said.
Meanwhile, the retailer is leaning on e-commerce in expansion to
countries where it doesn't currently have stores. Wal-Mart's focus
is on e-commerce markets in the U.S., U.K., Brazil and China, but
Mr. Ashe wants customers anywhere to have access.
"I fully expect us to be serving countries through just
e-commerce in the future," Mr. Ashe said.
Write to Shelly Banjo at shelly.banjo@wsj.com
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