On the back of yesterday's small losses, stocks opened slightly higher this morning with the S&P 500 and the narrower, price-weighted Dow Jones Industrial Average (^DJI 0.26%) up 0.06% and 0.17%, respectively, as of 10:05 a.m. EDT. Banks reopened in Cyprus today, and things appear quiet on the European front, with major European markets solidly in the black, helping to reverse yesterday's losses.
Bricks-and-clicks, finally
Retailing giant and Dow component Wal-Mart (WMT +0.99%) is ramping up its e-commerce efforts in a head-to-head battle with online commerce heavyweight Amazon.com (AMZN 0.89%). On Tuesday, during a media event at Wal-Mart's California digital commerce unit, @WalmartLabs, the company announced a number of new tools and services, including self-service lockers that will enable shoppers to order goods online for pickup and payment at their local Walmart store. (Amazon already lockers at Rite Aid and Staples.)
Wal-Mart is responding to two specific threats: First, its core customer base of shoppers earning less than $60,000 per year is becoming increasingly digitally savvy, concurrent with the growth in smartphone use. Second, Amazon is encroaching onto Wal-Mart's staple product categories -- everyday items such as diapers.
But Wal-Mart isn't in this race just to protect its territory -- the opportunity is much larger than that. Because while Wal-Mart may be the 800-pound gorilla in brick-and-mortar retailing, it remains a laggard in online commerce. The company forecasts that online sales will exceed $9 billion this year, but that's less than 2% of the $491 billion analysts expect the retailer to generate in total revenue in the current fiscal year ending in January 2014. Meanwhile, analysts are expecting nearly $76 billion in revenue from Amazon this year and $92 billion in 2014. As Wal-Mart chief technology officer Jeremy King told Bloomberg Businessweek: "Amazon is always in our sights. My biggest issue is playing a catch-up game."
King, an engineer who was instrumental in building eBay's infrastructure, is an example of how seriously Wal-Mart is taking this game. According to an article in Fast Company, in 2011, tired of taking phone calls from a Wal-Mart recruiter, King said he'd consider interviewing if Wal-Mart's CEO got on the phone, thinking that would be the end of it. Instead, King found himself on a 45-minute videoconference during which CEO Mike Duke pitched him on joining Wal-Mart. King signed up in the summer of 2011, and he now runs @WalmartLabs in San Bruno, located across the street from YouTube's headquarters.
Can Wal-Mart beat Amazon at its own game? That's difficult to predict, and Wal-Mart has stumbled in this area in the past. What is certain, however, is that Wal-Mart appears very focused, and it already has an impressive command of logistics and information technology, as well as the means of its ambition. That makes it a formidable competitor that Amazon should not underestimate -- these are no Arkansas hillbillies.
