Login

ADVERTISEMENT

Wal-Mart boosts digital basket

One of the reasons behind Wal-Mart's $3.3 billion acquisition of Jet.com last year was the e-commerce website's "smart cart" technology, which is designed to give online shoppers more control over the price they pay for a basket of goods.

The technology will make its way to Walmart.com soon.

Marc Lore, Jet.com's founder and Wal-Mart's U.S. e-commerce chief, said during the retailer's annual meeting with investors Tuesday that the smart cart will be migrating to Walmart.com "over the next year." It was one of several digital initiatives he touched on, offering a glimpse of the next steps in Wal-Mart's online business.

Lore and his team developed the smart cart system for Jet. Prices are reduced in real time as customers build a bigger basket of goods. The reduced prices are determined by factors such as whether items can be packaged and shipped from the same warehouse, customers use a debit card instead of a credit card and are willing to waive the right to return items.

"We're able to leverage the smart cart technology on Jet to empower customers to build bigger, smarter baskets of products so we can pull supply chain costs out and give customers even lower prices," Lore said Tuesday.

Wal-Mart Chief Executive Officer Doug McMillon said after the acquisition that Lore and Jet had "created a unique way to deliver the lowest-cost basket online" and believed the smart cart fell closely in line with the retailer's own pricing policies.

Retail experts previously said Wal-Mart was likely to add the technology to its website even though Wal-Mart and Jet would remain stand-alone entities. Acquiring the technology was one of the keys to the purchase. So they were not surprised to hear Lore confirm the plan as the retailer continues to compete with online giant Amazon.com.

"The smart cart capability essentially fulfills 'Save Money. Live Better' in the digital space," said Carol Spieckerman, a retail consultant and president of Spieckerman Retail. "Although Wal-Mart has generally followed the path of keeping its acquired banners separate from the mothership, the next phase will be to selectively integrate capabilities that benefit the overall enterprise. Smart cart certainly qualifies."

Lore did not provide any other details about the integration into Walmart.com. But Wal-Mart reiterated plans to focus on its digital business, technology and store remodels in the next fiscal year.

The company anticipates U.S. e-commerce sales will reach $11.5 billion before the end of the current fiscal year on Jan. 31. Wal-Mart projects a 40 percent growth in sales during fiscal 2019 as it continues to build out the unit. Online sales have grown 62 percent through the first half of the current fiscal year.

The surge has come after Lore joined the company as part of Wal-Mart's acquisition of Jet.com. Neil Stern, a senior partner with Chicago-based McMillan Doolittle, said Wal-Mart is showing "there is a place for them" as Lore and the company continue to unveil plans to compete for digital sales.

"They can carve out a position and it can be both unique and competitive against Amazon," Stern said. "By and large, very few other companies have been able to do that."

Lore said Wal-Mart will continue to make strides in merchandising. The company is adding category specialists to oversee the top 1 million online items. Those specialists will be in charge of perfecting every aspect of a specific item online like treadmills, vacuum cleaners or food storage bags.

Wal-Mart has already hired about 250 category specialists and is planning to add 50 more each month. Lore said the goal is to have about 2,000 category specialists to oversee those top 1 million items.

The retailer also is working on other measures to "elevate" the Walmart.com brand, according to Lore. A website redesign to make Walmart.com more "modern" will launch in the first quarter of fiscal 2019. There are initiatives aimed at bringing a more premium assortment. Wal-Mart is even adding some color -- blue -- to the boxes it ships.

All of Wal-Mart's digital efforts continue to impact profits, but Lore said the company is in "heavy investment phase."

"This year should be the largest loss in e-commerce and we'll see slight improvement next year," Lore said.

But he told investors as the online business continues to grow in scale, profitability will improve.

"E-commerce is a scale game so we have a lot of work to do," Lore said. "But we like the direction we're heading."

Business on 10/12/2017



Log in to comment