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Walmart.com may become an online mall (WMT)
BI Intelligence
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Walmart and Lord & Taylor are in talks to give the department store its own space on Walmart.com, a source told The Wall Street Journal.
Under the partnership, (the financial details of which haven't been disclosed), Lord & Taylor's own website, lordandtaylor.com, would continue to operate, and the department store would retain control of its inventory and fulfillment for orders on both sites. Customers would be able to pick up and return Lord & Taylor orders placed through either channel at Walmart stores.
This is potentially part of a larger plan to turn Walmart.com into an online mall. Walmart may be looking to house a number of retailers on its site, including previous acquisitions Bonobos and Jet.com, according to WSJ’s source. That's likely because providing inventory from a swath of retail players on Walmart.com could attract many new shoppers by turning the site into a one-stop-shop, similar to a shopping mall. Moreover, customers would be afforded the added convenience of being able to pick up and return their orders at one of Walmart's many brick-and-mortar locations. Walmart already has a good foundation of retailers to fill out its online mall, as it can utilize its large number of e-commerce acquisitions.
Being part of Walmart’s online mall may prove valuable for Lord & Taylor and other retailers. As many brick-and-mortar retailers struggle, getting on Walmart.com could provide considerable exposure and sales. Lord & Taylor’s website attracted less than 1 million monthly active users in the US between February and July, for example, while Walmart.com had approximately 79 million, so a spot on the site could result in many more impressions for the department store.
One key aspect to keep an eye on is how much control retailers will have over their “stores” in Walmart’s online mall. Brand image is very important to retailers, and Walmart is generally perceived as a low-price retailer, so third-party sellers may only want to join if they have full creative control.
Meanwhile, boasting an online mall may help Walmart better compete with Amazon.Housing high-end brands on Walmart.com could bring in consumers who don’t usually shop with the retailer, giving it a larger base as it works to match Amazon’s e-commerce prowess. Walmart appears to be more than willing to team up with others in order to effectively battle Amazon, as it has already been working with Google. And given the dominance that Amazon increasingly wields in retail, a collaborative approach could be the way to go.
Brick-and-mortar retailers are caught on the wrong side of the digital shift in retail, with many stuck in a dangerous cycle of falling foot traffic, declining comparable-store sales, and increasing store closures. Over 8,600 retail stores could close this year in the US — more than the previous two years combined, brokerage firm Credit Suisse said in a recent report. Meanwhile, e-commerce pureplays are riding the rise of digital commerce to success — none more so than Amazon, which accounted for 53% of online sales growth in the US last year, according to Slice Intelligence.
In response, many brick-and-mortar retailers have started to use omnichannel fulfillment methods that leverage their store locations and in-store inventory in order to better compete in e-commerce. These omnichannel services, including ship-from-store and click-and-collect, can help retailers manage the transition to digital by:
Increasing online sales by offering cheaper, more convenient delivery options for online shoppers.
Limiting the growth of shipping costs as online sales volumes increase by leveraging store networks for delivery.
Keeping stores relevant by turning them into fulfillment centers that pull customers in to pick up online orders.
However, few retailers have mastered these new fulfillment services. While these companies have spent years optimizing their supply chain and logistics networks for delivering goods to their stores or directly to customers’ doorsteps, most have yet to figure out how to profitably bring their store locations into the e-commerce delivery process.
Jonathan Camhi, research analyst for BI Intelligence, Business Insider's premium research service, has laid out the case for why retailers must transition to an omnichannel fulfillment model, and the challenges complicating that transition for most companies. This omnichannel fulfillment report also detail the benefits and difficulties involved with specific omnichannel fulfillment services like click-and-collect, ship-to-store, and ship-from-store, providing examples of retailers that have experienced success and struggles with these methods. Lastly, it walks through the steps retailers need to take to optimize omnichannel fulfillment for lower costs and faster delivery times.
Here are some of the key takeaways from the report:
Brick-and-mortar retailers must cut delivery times and costs to meet online shoppers’ expectations of free and fast shipping.
Omnichannel fulfillment services can help retailers achieve that goal while also keeping their stores relevant.
However, few retailers have mastered these services, which has led to increasing shipping costs eating into their profit margins.
In order to optimize costs and realize the full benefits of these omnichannel services, retailers must undertake costly and time-consuming transformations of their logistics, inventory, and store systems and operations.
In full, the report:
Details the benefits of omnichannel services like click-and-collect and ship-from-store, including lowering delivery times and costs, and driving in-store traffic and sales.
Provides examples of the successes and struggles various retailers have experienced with omnichannel delivery.
Explains why retailers are having trouble managing costs with their omnichannel fulfillment efforts, which are eating into their profits.
Lays out what steps retailers need to take to optimize costs for their omnichannel operations by placing inventory where it best meets customer demand.
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