The acquisition will add more than 300 products to L’Oreal’s lineup.
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While the web site seeks in part to entice shoppers into Wal-Mart stores, the stores return the cross-channel favor, the company says. “Our stores are a big venue for letting people know that Wal-Mart is online,” the spokeswoman says. “For instance, before Valentine’s Day, we had signage in our stores letting shoppers know they could order flowers at Walmart.com and have them shipped directly to that special someone. That’s something the stores don’t do. But Walmart.com can, and that is something we were able to convey through the stores.”
Though the web isn’t a big contributor to Wal-Mart’s total sales, it’s likely to grow in that regard in a way that mirrors the web’s growth in the rest of retail. “Wal-Mart has certainly not tapped out the U.S. market. But to maintain historical growth they are likely going to need to attract a more affluent customer, and that means their product base is going to need to become increasingly appealing to those consumers,” notes Cassar.
Toward that end, greater expansion online into consumer electronics, which it appears the company is already doing, could be a good fit. The educated electronics buyer can find detailed product information from a number of sources online and off before he buys. With that research in hand, and manufacturers’ product specifications being identical across all retail outlets, price remains the only differentiator. Shoppers look for what they want where it’s cheapest, and chances are it will be Wal-Mart or Walmart.com.
Wal-Mart also is expanding into some slightly more upscale items of apparel, for example, such as through an agreement that brings Levi-Strauss clothing into the stores. “Wal-Mart’s goal is to have a 30% market share of everything they sell, and they only have that in a handful of things. So they are eyeing everything,” Goetzinger says. After building its grocery sales over the past decade, apparel could represent the next big push for the company. If it gets the offering right on the customer side, analysts say, the company would have a major advantage given the supply chain efficiency it already commands in other areas.
But what would such moves means for Walmart.com? After all, it pulled an earlier apparel offering off the web, and except for gift baskets containing specialty foods, groceries aren’t available online.
The likelihood is that if Wal-Mart can figure out a way to realize a sufficient percentage in moving those-or any other goods-online, there’s little to stop it from doing so over time.
“As long as they can take care of the fulfillment, most other categories should be easily transferable onto the web,” says Goetzinger. “Their scale makes them extremely efficient with all of their costs. They have an incredible ability to leverage their IT to generate more sales and productivity.” And while it may not represent a great deal more in the way of a percent of total revenue, the web will increase its contribution.
And that’s what should concern any online retailers who think they are immune to Wal-Mart’s growing dominance. “At some point,” Goetzinger adds, “they will nail it.”