Walmart to boost mobile prowess as digital investment grows
Walmart’s intention to step up investment in digital and ecommerce initiatives is likely to include a heavy dose of mobile as the retailer builds on recent successes such as Savings Catcher and looks for new ways to transform the shopping experience for smartphone users.
Walmart Stores president and CEO Doug McMillion told attendees at the retailer’s annual investor meeting yesterday that it will invest more in building its ecommerce offerings going forward and less in new stores. The critical role of mobile is exemplified by yesterday’s announcement of InstaWatch from Walmart, which enables smartphone users to scan a receipt using the Savings Cather app to stream the digital copy of the physical movie DVDs they purchase in-store or online.
“This is an evolutionary, rather than revolutionary change for Walmart,” said Jason Goldberg, vice president of commerce strategy at Razorfish. “They were already making major investments in ecommerce and @walmartlabs, far outspending many other retailers.
“We are so over-stored in the US compared to the rest of the world – the US has about 47 square feet per capita of retail space versus 23 in the UK or 13 in Canada,” he said.
“It’s difficult for a retailer like Walmart to find enough markets to keep opening stores at the pace the market expects, so citing the shoppers shift online is a convenient justification to the market to slow the pace of new store openings, while aggressively investing in digital.”
Leading digital touchpoint
During the meeting with investors, Walmart said investments in e-commerce and digital initiatives are expected to range between $1.2 and $1.5 billion in fiscal year 2016, up from an estimated $1.0 billion this year. The investments will include technology, infrastructure and other areas to support ecommerce and digital initiatives to serve customers.
At the same time, the retailer will decrease the amount of retail square feet it adds.
Walmart is focused on digital receipts to drive omnichannel experiences
Globally, Walmart expects to finish this year with approximately $12.5 billion in ecommerce sales. Looking ahead, the retailer expects a 25 percent increase in global ecommerce sales next year.
Between 2016 and 2018, Walmart expects ecommerce growth to average between 30 and 40 percent.
“Mobile is clearly the most important digital touchpoint for Walmart,” Mr. Goldberg said. “Not only is about half their Web traffic mobile – 53 percent of the 400 million page views last Thanksgiving were from mobile – but mobile is also the source of the overwhelming majority of digitally influenced in-store sales for Walmart.
“Walmart understands that in-store mobile is a major opportunity to reduce friction in the store and sell more; in fact, across all of retail we expect that mobile will influence $700B of offline sales by 2016,” he said. “That’s why we’re seeing Walmart make major investments in features like their mobile apps in-store mode and their Savings Cather feature.”
New fulfillment centers
The greatest investment of capital and in operating loss for Walmart’s ecommerce operations is expected to come over the next 18 to 24 months.
These investments will include expanding its fulfillment network and building new data capabilities to enhance the customer experience.
Next year, Walmart will build new online fulfillment centers in Georgia and Pennsylvania, each over 1 million square feet. These centers will include dedicated online fulfillment centers, shared distribution centers and ship-from-store locations that are all tied together.
The InstaWatch service launched yesterday
Walmart is a leading mobile retailer and continues to build its prowess here.
The retailer is currently testing a new same-day pick-up concept enabling customers to order groceries online or by mobile phone and retrieve their orders from a drive-up facility (see story).
This summer, Walmart brought its Savings Catcher feature – which enables customers to scan their receipts to compare prices at nearby stores – to its mobile application, helping to push the app to the top of the Lifestyle category on the Apple App Store for the first time (see story).
“I think we’re going to see Walmart continue to invest in innovative in-store mobile experiences,” Mr. Goldberg said. “I’m sure we’ll see them experimenting with ways to make the mobile apps more context-sensitive in the store, such as indoor geo-location and beacons.
“Walmart has to give in-store shoppers compelling reasons to use their own mobile properties rather than Amazon’s Price Checker,” he said. “Walmart is a major supporter of the CurrentC cardless transaction system, so I expect we will see that deployed in their mobile app in 2015, giving shoppers another reason to stay in the Walmart mobile ecosystem.
“The interesting question is, what new mobile experiences will Walmart invent to entice mobile shoppers who are not inside a Walmart store?”
Chantal Tode is senior editor on Mobile Commerce Daily, New York