"What Wal-Mart has is thousands of distribution points around the country with their stores, and that's their advantage," said Charles Grom, a retail analyst with Deutsche Bank Securities in New York. "I don't think they have a lot of time to experiment with @WalmartLabs and they need to move quicker than they are."
To grow its online revenues, e-commerce needs to be prioritized into the Big Box culture. But that will be a huge shift from the way Wal-Mart has been run up until now.
"We didn't talk about dot-com in the stores," says Joel Anderson, who took the helm as president of Walmart.com less than four months ago after serving as SVP of Wal-Mart's northern plains division. "And you've got to make it top of mind, so when we're out of stock in the store, the very next sentence is we can get that for you online. When that's part of incentive pay and bonus, it changes [store employees] behavior."
Starting in February, Wal-Mart will credit team members with online sales picked up in stores, and also online sales delivered within a store's set physical area. Anderson says half of online orders are now picked up in stores. Shipping also integrates online and stores more, by effectively turning Wal-Mart stores into distribution hubs. Web orders can be shipped to a store or a FedEx location for free, shipped to a home, or, on eligible items, picked up that day from a store. "Fast, faster, fastest," is the new policy.
Imagine cotton sheets ordered by a customer in Elkhorn, Ne. in the morning, arriving that afternoon from one of its Omaha Supercenters just a few miles away. Same day shipping is the Mecca of online commerce – only a few brands, such as Nordstrom (JWN) and Barnes & Noble (BKS), have tried it in select cities. Anderson says the retailer is looking at that option -- but still won't commit. At least for now.
"We're experimenting with that, but it's not in a rolled-out format," he says. "It's a possibility."
Free shipping is another service that consumers want, but Wal-Mart has yet to adopt completely. Still, three out of four customers would make more purchases online if their orders were shipped free, according to the Boston-based online behavior research firm, Compete. But Wal-Mart is still hesitating on that as well.
"To the home isn't 100% [free shipping,] but it's getting darn close," says Anderson. "I get that free shipping is important to the customer."
Wal-Mart is preparing for the end of the Big Box era. Although it still plans to open more stores in the U.S., even Wal-Mart notes these "are smaller than the larger Supercenters we've built in the past," said Karen Roberts, president of Wal-Mart Realty during its shareholder and analyst call in October. And this comes as pure-play etailer Amazon (AMZN) launched its first storefront called Beauty Bar in Long Island, NY this fall. While not branded Amazon, it's a toe in the water towards a hybrid model that Wall Street is eyeing closely.
