March 19, 2013, 2:16 PM

Wal-Mart outlines its e-commerce priorities

Expansion in key markets, technology development and fulfillment are all on the to-do list.

Kevin Woodward

Senior Editor

Lead Photo

Wal-Mart has outlined three priorities as it seeks to generate $9 billion in annual e-commerce revenue.

International expansion, a new technology platform and an improved fulfillment network are top e-commerce priorities for Wal-Mart Stores Inc., the retailer outlined at the Bank of America Merrill Lynch 2013 Consumer & Retailer Conference.

Wal-Mart, No. 4 in the Internet Retailer Top 500 guide, expects to generate $9 billion in global e-commerce revenue in its current fiscal year, ending Jan. 31, 2014. In February, Wal-Mart’s Neil Ashe, president and CEO of global e-commerce, said e-commerce revenue growth was “accelerating and ahead of our plans.”

In 2011, Wal-Mart’s U.S. e-commerce sales totaled an Internet Retailer-estimated $4.9 billion, up nearly 20% from $4.1 billion the prior year. In comparison, Amazon.com Inc., No. 1 in the Top 500, had $48.08 billion in sales.

“We’ve got three clear priorities for e-commerce, and the first is to penetrate and expand in key markets,” Charles M. Holley Jr., executive vice president and chief financial officer said last week at the Bank of America event. “We have a very solid foundation of e-commerce in the United States and United Kingdom. We have a new and exciting platform of growth in China, and we have a very fast-growing business in Brazil.” Sales were healthy in Brazil last year, he said, with expectations for the same this year. He did not disclose sales figures for Brazil.

In 2012, Wal-Mart raised its stake to 51% in Yihaodian, a China-based e-retailer that sells more than 180,000 products. The deal gives Wal-Mart “a very strong foothold in the markets that can only be matched by the U.S. in terms of potential,” Holley said.

Another priority is to develop Pangaea, Wal-Mart’s global technology platform, Holley said. He provided no details about Pangaea. Wal-Mart will continue to invest in other e-commerce technologies and in mobile commerce, he said. It has been testing self-checkout in its stores for shoppers using its Scan & Go iPhone app. And in August it debuted a new search tool for its own web sites, dubbed Polaris, developed by its research lab @WalMartLabs.

The retailer’s other e-commerce priority is to improve its fulfillment network, primarily in the United States. Wal-Mart is still testing same-day delivery, Holley said. The test only is in four cities now. If it expands, Wal-Mart has 4,000 stores that could serve as direct-to-consumer fulfillment centers, he said. “We need to make sure we leverage those stores,” he said.

Wal-Mart knows it has some catching up to its e-commerce competitors to do, Holley said. “We also know that we have not been good at the technology part of this, but we’re catching up quickly with our search engine and how we market on the Internet. We have a lot of work to do to make sure we’re efficient and getting the products to the customers, but we feel like that we have the tools to go do that.”

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