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Wal-Mart Stores, Inc. (WMT)’s e-Commerce Potential

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Wal-Mart Stores, Inc. (NYSE:WMT) sold $466 billion worth of merchandise in its most recent fiscal year. By comparison, only 26 countries produce a GDP higher than Wal-Mart Stores, Inc. (NYSE:WMT) ’s revenue. Despite being such a behemoth in the retail space, Wal-Mart Stores, Inc. (NYSE:WMT) is still behind its competition in some respects – particularly e-commerce. While the company expects to generate $9 billion in online revenue this year, that’s just 2% of its total sales from last year and a far cry from Amazon.com, Inc.’s (NASDAQ:AMZN) $61 billion.

Wal-Mart Stores, Inc (NYSE:WMT)

The importance of e-commerce

Last year, e-commerce spending topped more than $1 trillion in business-to-consumer spending. That number represents 21% year-over-year growth, which is expected to continue this year as online spending tops $1.3 trillion. As more consumers turn to online outlets over brick-and-mortar stores, Wal-Mart Stores, Inc. (NYSE:WMT) has the most at stake as the leader in low-cost retailing.

Wal-Mart Stores, Inc. (NYSE:WMT) has been struggling with falling foot traffic for years; an internal memo reported the company saw a 2.6% decrease in traffic during the first half of 2011. With the rapid growth in online retail, the struggles have continued for Wal-Mart stores.

@WalmartLabs

Wal-Mart Labs is the new digital commerce arm of Wal-Mart Stores, Inc. (NYSE:WMT). It works on projects that not only increase Wal-Mart’s e-commerce sales, but also increase foot traffic through improved in-store experiences. The company has been making a lot of progress recently. Here are a few of its biggest innovations.

A revamped search engine that a team of 15 engineers put together in 9 months. The new search engine allows customers to find what they’re really looking for, and has improved sales conversions by 20%. With $9 billion in online sales, if you assume about half of sales come from search, that’s a $1 billion improvement.

Setting up lockers for online customers to come pick up orders at local stores. This is a move Amazon made in 2011 to add convenience to Amazon shoppers that often miss the delivery man. Wal-Mart adds the advantage of no shipping charge and 24-hour access. With 4,000 stores, Wal-Mart Stores, Inc. (NYSE:WMT) has a distinct advantage over Amazon in sheer quantity of locker locations as well as fulfillment speed.

An innovative “Scan & Go” app feature that allows for quicker and easier self-checkout, and indicates a big step toward full mobile checkout. This is similar to the Apple Inc. (NASDAQ:AAPL) Store app that allows users to check out with EasyPay – no personal interaction necessary. Smoother checkout lines, or their removal, will definitely improve the in-store shopping experience, and help Wal-Mart maintain foot traffic levels.

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