Shop Talk: Walmart.com's no Amazon.com
By Ken Yamada
Redherring.com, November 07, 2000
Walmart.com has re-opened after a month-long overhaul, but don't expect the next Wal-Mart
(NYSE: WMT) of the Internet. Even Walmart.com CEO Jeanne Jackson doesn't envision a holiday
stampede.
"We are not out this Christmas to score big numbers against any of the charts," Ms. Jackson
tells me. Sitting in her Menlo Park, California, office Friday she explained: "If you drive too much
traffic in your first year and you break the system, you do yourself further harm next year."
It's not exactly Walmart.com's first year, but Ms. Jackson feels that way. She was recruited
after Walmart.com made two dismal starts, coming on board last spring to pump life into the
four-year-old general merchandise Web site. Despite its parent company's bricks-and-mortar
dominance, the online venture lags behind Sears.com (Nasdaq: S), K-Mart's Bluelight.com,
Target.com (NYSE: TGT), and others, according to Media Metrix.
Ms. Jackson insists she's building Walmart.com for the long-haul, and I believe her. As CEO for
Banana Republic, she transformed an ailing brand by opening big, stylish downtown stores in
various cities. She also served as CEO of the Gap (NYSE: GPS)'s catalog and Web operations.
She knows what it takes to build a successful, old-fashioned retail operation, and that
knowledge has been sorely lacking among so many fly-by-night e-tailers.
So it's no wonder she opted to shut down the Walmart.com site for renovation, an unheard of
concept for dot coms rushing toward an IPO. (Ms. Jackson also hopes for her own dot-com IPO,
though she insists the rush isn't as pressing, given the parent company's deep pockets.)
THE HARD STUFF
"I find it absolutely amusing that people were bashing us for closing our doors," Ms. Jackson
says. "We could have turned the Web site on, that's not the problem. Having the Web site link
to inventory, the inventory link to customer service (and so forth).... That's hard."
Walmart.com's goal this holiday season is proving to customers that it's a reliable, efficient
operation that provides good customer service. I believe those qualities are what create a
long-lasting brand, and that's the thinking Wal-Mart must pursue at this point.
"Every time I read one of these articles where somebody comes out and says, 'We're going to
be the next Amazon.com (Nasdaq: AMZN) this holiday,' I just want to say: 'What are you
thinking?'," Ms. Jackson says. "They're going to do over a billion dollars this holiday. If we try to
ramp a billion dollars worth of volume that fast, I think [it] would be irresponsible."
Now also consider this: Walmart.com's failure to live up to its name may do irreparable damage
to the company's core business. In retailing, image and perception can make or break stores, so
if Walmart.com fumbles online and alienates customers, those gigantic stores suddenly may
appear tainted.
Some trends are emerging that play to Walmart.com's long-term outlook. Bricks-and-clicks
businesses, such as REI.com and Nordstrom.com (NYSE: JWN), are demonstrating the
advantages of combining stores with other channels such as Web sites and catalogs. Direct mail
also appears to be a big driver of online commerce.
Walmart.com already has begun piggy-backing its marketing in with the company's store flyers,
delivered to millions of shoppers. With an established name and strong customer base,
Walmart.com should have an easier time than newborn dot coms in attracting online shoppers.
Also, industry giants tend to overshadow Internet upstarts just by their online presence. In the
travel industry, for instance, a yet-to-launch airline ticket Web site called Orbitz, backed by
major airlines, already has investors fleeing from Web companies with similar offerings. The same
trend also is happening in other markets.
Nevertheless, Walmart.com's success is far from assured. The Web site continues to be a
financial sinkhole, which observers think will gobble $100 million this year. The idea that a
general merchandise store can survive on the Web is unproven. In the physical world, one-stop
shopping is convenient. On the Web, store hopping is much easier.
So, will Walmart.com become the next Wal-Mart on the Internet? Not for a while.
redherring.com |
