Over the past 10 years, Amazon.com (Nasdaq: AMZN) is up 187% while Wal-Mart Stores (NYSE: WMT) is down -17%. Clearly investors like what they see at Amazon, but I believe the company's management needs to keep an eye on Wal-Mart's online arm.
The sleeping giant
Amazon is without a doubt the king of online retail, but Wal-Mart has been the king of all retail for more than 40 years. That's 40-plus years of cutting costs, building a loyal customer base, and storing seasonal sales data.
As Wal-Mart learns how to apply those tools to their web property, Walmart.com, Amazon will face an increasingly relentless foe. The two giants have only begun to butt heads as witnessed during their 2009 holiday season book price wars, which benefited consumers but came at the expense of traditional book sellers Barnes & Noble (NYSE: BKS) and Borders (NYSE: BGP).
Wal-Mart outpacing Amazon
Over the past 12 months, Amazon's web traffic has grown 10%. This is commendable during a high unemployment period as consumers tighten their discretionary spending. But Wal-Mart has not been resting on its laurels. During the same time period, they have grown 20%, greatly outpacing their web-centric competition.
Source: Compete.com
Amazon still garners twice as many web visitors as Walmart.com, but the retail giant is gaining on them.
Loyal customers go online
While the typical Wal-Mart customer may not appear to be the most web-savvy, 15 seconds of research proves otherwise. Navigate to any random product on walmart.com, such as these stylish Miley Cyrus Women's Python Flats and you'll notice a pretty interesting fact. Most products on the site have a dozen or more product reviews, which means customers are not only buying from Walmart.com, but also engaging with the site. Compare this activity to other retailers' online shops such as Best Buy (NYSE: BBY) and Target (NYSE: TGT), and you'll notice that Walmart.com has significantly more usage.
The Foolish bottom line
In the short-term, Wal-Mart investors should not look for the online division to be a significant driver of value for the $187 billion giant, but it would benefit Amazon investors and management alike to pay special attention as Wal-Mart applies their industry-shaking ways to the web.
Will Walmart.com surpass Amazon.com in web traffic in the next 24 months? Post your prediction in the comments section below and let's meet back in this space in 2012.
