Wal-Mart's Online Global Expansion Can Be Misleading

Wal-Mart is pushing hard to ramp up its global E-Commerce efforts, according to some employment ads it's been posting, The Wall Journal reported. But there are reasons behind Wal-Mart's sluggish online sales.

"Wal-Mart during the past two weeks began advertising for a key architect of the global E-Commerce effort, the program's director of market development. Qualifications for the position, which pays more than $100,000 a year, suggest where Wal-Mart may be focusing its expansion," the Journal story said. "Fluency in one or more of the following languages—Mandarin, Cantonese, Japanese, Portuguese, Spanish, Hindi and French—is a plus, the job posting says."

The story pointed out that Wal-Mart's online earnings show many smaller retailers have outflanked it. Well, let's be fair: With Wal-Mart's $405 billion annual revenue, every retailer is a smaller retailer. But with $1.74 billion in online revenue in 2008, having the Bentonville powerhouse beaten by online purebred Amazon ($19.2 billion) is not that humiliating. When Wal-Mart's E-Commerce dollars are also being bested by Staples, Office Depot, OfficeMax, Sears and Best Buy, however, that's hardly a morale booster.

But the world's largest in-store retailer has some legitimate reasons. As the biggest, it has always had the most to protect. That thinking is what slowed down a lot of large brick-and-mortars in the early days of the Web, and Wal-Mart was understandably among the last to succumb to the inevitable.

Also, the practical, everyday discount nature of Wal-Mart's persona doesn't lend itself to an especially exciting online presence. In fact, Walmart.com has consistently deployed helpful technology and has been at the forefront of shop-online-pickup-in-store as well as showcasing in-store inventory.

Those are excellent features and shrewd uses for the Web site. But both techniques also use the Web to drive sales to the stores. From a shareholder perspective, that's fine. A dollar's a dollar, and a dollar spent in-store will likely yield several more dollars in-store, as long as the consumer is already there.

But it also means that when the company's E-Commerce revenue is isolated, it delivers a misleading picture.

The global market is a different situation. Wal-Mart has had mixed results with in-store launches overseas, and it's likely that its E-Commerce operation will face similar hurdles. But as long as Wal-Mart is still making a lot more revenue than any other retailer on the planet, it's hard for any criticisms to stick.

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