Cyber Monday Is a Chance for Walmart and Target to Fight Amazon on Its Own Turf
Amazon helped create the growing online shopping bonanza that is Cyber Monday, an offspring of Black Friday that helps kick off the holiday retail spending season. But major bricks-and-mortar retailers like Walmart have their own strategies for taking on Amazon at its own e-commerce game.
Walmart (WMT) and Target (TGT) lead a handful of the nation’s top retailers whose online revenue growth is far out-pacing overall revenue growth. That’s thanks to aggressive expansion of so-called omni-channel and “click and collect” strategies designed to chip away at Amazon’s dominance in what is expected to be a $7.8 billion Cyber Monday and a $123 billion holiday e-commerce season in the U.S. overall this year.
Amazon is finally finding a more formidable foe in traditional retailers. “Convergence of online and offline, the physical and the digital, is the longer-term dynamic,” said Greg Girard, program director for worldwide retail intelligent product merchandising and marketing strategies at IDC.
Target and Walmart have learned from their holiday season successes, expanding online shopping operations year-round through acquisitions and reshaping their in-store operations. They have also used stores as pickup and delivery hubs-taking advantage of infrastructures that Amazon (AMZN) and online-only retailers lack.
Walmart said this month that third-quarter e-commerce sales soared 43% compared to a year ago, following a 40% year-over-year jump in the previous quarter. The Bentonville, Ark.-based company has blanketed the country with click-and-collect services, now available at 2,100 stores, as well as grocery delivery from 600 locations.
This year, Walmart is expected to grab 4% of U.S. e-commerce sales, or about $20.9 billion, up from 3.3% last year, eMarketer said. That surge has catapulted it past Apple (AAPL)-which faces weak iPhone demand -in estimated e-commerce sales this year, eMarketer analyst Andrew Lipsman told Barron’s.
The 1,800-store Target chain on Tuesday reported a 49% jump in e-commerce sales -its biggest ever-during the third quarter. Overall, revenue increased 5.6%, though Target stock tumbled as it missed earnings expectations amid a wider market selloff. Online sales represented 6%, or about $1.07 billion, of Target’s $17.8 billion in third-quarter revenue. Target CEO Brian Cornell repeatedly credited e-commerce growth during a conference call.
The online holiday shopping experience has morphed the past four years “from a two-day event [Black Friday and Cyber Monday] to a week, even longer,” said Ryne Misso, director of marketing at market research firm Numerator. The shift was influenced by the everyday success of Amazon during the holiday season and before, and it’s a nod to consumer exhaustion with the mad dash for deals both online and in person.
Holiday e-commerce sales are expected to jump 16%, to $123 billion, in the U.S. this year. That’s good for about 12.3% of total domestic holiday season sales, according to eMarketer, the largest portion ever.
Despite the extended deals season, Cyber Monday remains a focus of the holiday shopping season, and has outgrown overall seasonal growth for at least four years, according to Taylor Schreiner, director of Adobe Digital Insights. The $7.8 billion in projected Cyber Monday sales would be up 18% from a year ago ($6.6 billion), and up 39% from 2016 ($5.6 billion).
Walmart has raised its digital profile through the acquisition U.S. e-commerce company Jet.com for $3.3 billion in 2016. It also completed a $16 billion investment for a roughly 77% stake in India e-commerce giant Flipkart in August. And it snapped up lingerie retailer Bare Necessities and plus-sized clothing startup Eloquii for undisclosed amounts this year.
Target has positioned itself as the anti-Amazon by using personalized, one-on-one support to improve e-commerce deliveries. More than three-fourths of Target’s stores (1,400) are outfitted to ship online orders. Nearly two-thirds of the chain’s online orders are fulfilled from a store.
Target’s e-commerce strategy heading into the holidays includes increasing its subscription-based Shipt personalized shopper service to 46 states from 35; expanding curbside pickup to nearly 1,000 stores; and removing the $35 minimum spend for free two-day shipping from Nov. 1 until Dec. 22, in a play for Amazon Prime customers.
Target executives have their work cut out for them in tackling an Amazon behemoth, which is expected to command 48% of online retail sales in the U.S. this year, or about $252.1 billion, according to eMarketer. The distant runner-up, eBay (EBAY), is at 7.2%. This means Amazon has extended it formidable lead from 2017, when it led eBay 43.1% to 7.6%.
“Amazon remains the king of e-commerce and is in no danger of losing its crown anytime soon,” analyst Lipsman said. “But online competition from brick-and-mortar retailers is heating up and Amazon has felt more of a need to respond to maintain its leadership.”
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