Marc Lore: Wal-Mart is still catching up to Amazon
Wal-Mart Stores Inc. and its upstart Jet unit continue to play catch-up to Amazon, especially when it comes to assortment, Jet founder Marc Lore, who is now the retailer’s U.S. e-commerce chief, said Wednesday at the Bloomberg Breakaway Summit.
The retailer’s recent slew of acquisitions (including women’s online apparel company Modcloth, outdoor e-retailer Moosejaw, online footwear site Shoebuy and soon reportedly online menswear site Bonobos) have helped Wal-Mart expand its assortment, Lore said.
Thanks to Wal-Mart’s immense store footprint and trucking fleet, it costs 75 cents to ship goods to a store and $5 to deliver it to a customer’s home, Lore said, which is why the company in April began offering discounts on a million items if they’re ordered online and shipped to store.
Lore also offered a critical assessment of Amazon’s handling of Quidsi, the consumer products sites he founded and that Amazon acquired in 2010 for $500 million. Lore went on to work for Amazon for a while at that time.
Quidsi operated six no-frills sites: Diapers.com for baby essentials, Soap.com for consumer products, Wag.com for pet supplies, Beautybar.com for health and beauty, Yoyo.com for toys and Casa.com for home goods. Amazon in March said that the Jersey City, NJ-based enterprise was unprofitable, but Lore said that Amazon likely stopped “building out the long tail” (in other words, expanding the assortment) after he left.
While that's clearly the thinking behind Wal-Mart's fast-and-furious acquisition mode of late, it's more likely that it became cumbersome for Amazon to run parallel businesses, especially since Amazon itself sells what Quidsi sold, experts told Retail Dive. Amazon's own private label goods, which include diapers and baby wipes, batteries, snacks, tech accessories, linens and other key product categories, are experiencing runaway growth, even emerging as the online leader in some categories, according to consumer spending research conducted by 1010data Market Insights. And Amazon is also enjoying explosive growth in other product categories, according to research from One Click Retail, including apparel, physical books, mattresses and home improvement.
Quidsi’s value to Amazon may simply have run its course. The operation presumably lent Amazon plenty of insights along the way, highly useful as it boosts its own offering of consumer products through its private label efforts and its marketplace — including all the categories found at Quidsi’s sites.
“From a retailing and manufacturing point of view, it’s very hard to operate efficiently under many banners. Everybody goes to one type of store — everybody buys the same item in each category,” Keith Anderson, vice president of strategy and insights at e-commerce analytics firm Profitero, told Retail Dive earlier this year. “As time goes on, it is less and less sustainable to support parallel domains, platforms, buying, marketing. This whole industry is built around choice — all of that creates complexity and inefficiency.”
Ultimately, Anderson said, that complexity could pose challenges at Wal-Mart and Jet, too. Like Quidsi, Jet is a consumer goods marketplace that puts low prices at a premium, though Jet boasts a “secret sauce” algorithm that empowers customers to tamp down their final price by making a series of choices on shipping speed, return policy, and other factors.
Meanwhile, Wal-Mart has something that Amazon doesn't (at least for now) — a formidable brick-and-mortar footprint to leverage for its e-commerce sales. Wal-Mart is able to lure customers to stores to take care of their own last-mile delivery (and save that $4.25 in shipping costs), and those picking up might also end up buying something else while they're there. Wal-Mart needs that savings badly, in light of its renewed commitment to low prices on consumer goods and groceries.
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