• Business Insider

Walmart is poised for a digital shopping spree

Last week, Walmart announced the acquisition of e-commerce pureplay ShoeBuy.com for $70 million in a deal that will bolster the footwear inventory on the retail giant's e-commerce subsidiary, Jet.com.

Now, it seems that as Walmart attempts to grow online revenue, which accounts for only 3% of total sales, similar acquisitions could be in the pipeline.

Walmart plans to spend $1.1 billion to bolster e-commerce operations in the year ahead, according to Motley Fool.

  • Walmart is increasing inventory in niche categories. Marc Lore, Walmart’s head of e-commerce and Jet’s former CEO, indicated that categories with long-tail, high-margin products are top priority for acquisition targets. ShoeBuy fits this characteristic, and Walmart will likely target similar apparel-focused companies in the year ahead. Walmart still does not rank in the top 10 online retailers apparel retailers, and a buy-versus-build strategy better positions the company to increase inventory quickly.

  • But Walmart needs to invest in the customer experience, too. Jet.com struggles with customer loyalty, with 70% of total sales coming from new customers as of February 2016, according to Slice Intelligence. Although acquiring smaller companies to boost inventory is a step in the right direction, Walmart will have to refine the customer journey to compete with the likes of Amazon and other successful online retailers.

These types of investments could help Walmart become a stronger e-commerce player. Walmart's online sales grew nearly 21% year-over-year (YoY) in Q3 2016, with gross merchandise volume (GMV) increasing over 28% YoY, excluding the recently sold Yihaodian division. This is a notable improvement from Q2 2016 when online sales and GMV grew 12% and 13%, respectively, YoY. As customers increasingly shift to digital, we expect Walmart to place more focus on increasing its inventory and merchant base for Walmart Marketplace, while scooping up online pureplays that can boost sales on Jet.com.

Of course, none of this will matter if customers don't complete the purchase process. This is a major point of emphasis for online retailers that are trying to reduce shopping cart abandonment and get online shoppers to finish the transaction.

  • Shopping cart abandonment is increasing, and it will continue to do so as more consumers shift to online and mobile shopping. In 2013, as many as 74% of online shopping carts were abandoned by shoppers, according to data shared with BI Intelligence by e-commerce data company, Barilliance. That abandonment rate is up from 72% in 2012, and 69% in 2011.

  • An abandoned shopping cart does not automatically translate to a "lost sale," because three-fourths of shoppers who have abandoned shopping carts say they plan to return to the retailer's website or store to make a purchase, according to data from SeeWhy. Online-only retailers are at a disadvantage to "omnichannel" retailers in this respect because they have fewer channels through which to recover lost sales.

  • Retailers can reduce the rate of abandonment and increase conversions by streamlining the checkout process and also by retargeting shoppers with emails after they've left a website. Initial emails, sent three hours after a consumer abandons a cart, average a 40% open rate and a 20% click-through rate, according to Listrak.

  • More broadly, an abandoned shopping cart should be seen as part of the increasingly complex series of steps a consumer might take before finally making a purchase and a strong indicator of consumer interest in a product or a brand. Technology that helps retailers collect and leverage online shopping cart data is likely to be a worthwhile investment.


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