It wasn't a question of if, but when.
As more and more big-box stores have stretched Black Friday into Thanksgiving , it only seemed logical that the start of the online shopping extravaganza known as Cyber Monday would grow past its usual confines.
Now, Wal-Mart Stores, Inc. (NYSE:WMT) is doing just that. In an effort to strengthen its foothold in e-commerce and compete with Amazon.com (NASDAQ:AMZN), the world's largest retailer announced that it would kick off Cyber Monday on Sunday at 8 p.m., offering over 2,000 deals. Among the discounts available are a $1,299 LG 65-inch 4K HDTV for $799 and a $799 Microsoft Surface Pro 3 for $599.
Why it makes sense
The term Cyber Monday was first coined in 2005 for the Monday following Thanksgiving, when online retailers would offer Black Friday-style promotions for holiday shoppers back at work (and at their computers ready to browse and order). In that era, there were no smartphones or tablets and high-speed Internet connections were more common in offices, making it much easier for white-collar workers to shop online while they were at work.
The e-commerce landscape has changed significantly since then, as mobile devices now command more traffic and shopping dollars than desktop computers. The need to shop at the workplace no longer exists, and the idea of workday online holiday shopping seems obsolete.
Wal-Mart noticed a shift in Cyber Monday shopping, as many of its customers would stay up past midnight in order to score on the deals. Google searches for "Cyber Monday," it observed, begin spiking on Sunday night, indicating consumers' eagerness to start shopping early.
A break with Amazon
After years of neglecting the e-commerce channel and allowing Amazon to build out its empire, Wal-Mart has finally realized the importance of online retail. The company is allocating a greater percentage of investment dollars to its e-commerce platform and cutting back on new store openings. Next year, the company plans to spend a record $1.1 billion on digital infrastructure.
But in 2015, many of Wal-Mart's e-commerce initiatives have borne an uncanny resemblance to old standards at Amazon, and critics have dismissed the boys in Bentonville for trying to out-Amazon Amazon. For instance, when Amazon launched Prime Day this summer, offering thousands of single-day deals for Prime members, Wal-Mart followed with its own rival sale, sparking a war of words between the two companies. The big-box chain also announced its Prime imitator, known as Shipping Pass, which gives customers free three-day shipping for a $50 annual fee.
Those aren't bad decisions in and of themselves, but Wal-Mart isn't going to stave off Amazon by simply copying it.
Different customers, different strategies
Wal-Mart and Amazon are direct competitors, and while both position themselves on wide selections and low prices, the two companies differ in ways that might not be immediately obvious.
Wal-Mart's roots are in rural America, and it is there, where the company's supercenters are most often found, that it is still strongest. Amazon, meanwhile, has focused on the urban customer, as the proliferation of its Prime Now same-day delivery program, which is now available in many of the nation's largest cities, shows. Amazon's customers also hail from a higher income level on average than Wal-Mart's, though data on the discrepancy varies. Finally, there is less of an overlap in the two companies' sales mixes than many would expect. Groceries make up 56% of sales at Wal-Mart, a category than Amazon has struggled to crack due to perishability, while the e-commerce leader's biggest segment is books, which contributes 16% of revenue and is of little interest to Wal-Mart.
Just as Wal-Mart's physical stores distinguish it from Amazon, it must find some way to distinguish itself online. Rolling back the kickoff for its Cyber Monday deals by four hours isn't going to make a difference to Wal-Mart's bottom line, but it shows the company is listening to its customers, following its own strategy, and trying to create a unique identity in e-commerce. By making moves like this and leading with its strengths in ways that include the expansion of its online grocery pickup program, the world's largest retailer puts itself in the best position to stay at the top.