Amazon is expanding its online lead over Walmart, according to the latest results from the retail giants. The competition between the two companies is watched closely, since Amazon is the number one online retailer and Walmart is the number two.
Walmart’s net online sales were up only 8 percent for the peak holiday quarter, the retail chain reported today. (Walmart didn’t break out specific e-commerce dollars.) That compared to 22 percent growth in Walmart’s online sales for the fourth quarter of last year.
Despite Walmart rolling out special holiday offerings including an early start to Black Friday and Cyber Monday in an attempt to boost e-commerce, its online sales growth is slowing.
Overall, Walmart’s revenues for the quarter fell 1.4 percent to $129.7 billion. In contrast, Amazon’s net sales were up 22 percent for the quarter to $35.7 billion.
Amazon has the advantage of a larger online presence in international markets, a larger selection and number of products online, and a more successful mobile app and customer loyalty program in Amazon Prime.
During 2015, Walmart invested billions to stay relevant in the e-commerce game, according to Fortune.
Walmart upgraded its mobile app and invested in the fulfillment of online grocery orders, allowing customers to place orders online and then pick up their groceries at a nearby store — a service now available in 150 Walmart stores in 20 markets as of February 2016.
Walmart announced in October that it had applied to the FAA for permission to test drone delivery with drones from China, another move clearly designed to pit the company against Amazon, which is developing its own drones for shipping purposes.
In December, Walmart announced its own Walmart Pay mobile payment system and its own open-sourced cloud service, OpenOps, an alternative to Amazon Web Services. However, despite Walmart’s advancements in website offerings and its mobile app, use of Amazon’s website and mobile app continued to outstrip the use of Walmart’s for the year, according to comScore.
Walmart also introduced a rival to Amazon Prime called Shipping Pass, available to select invitees last June. The service offers unlimited 3-day delivery and costs just $50 a year, or about half of what Amazon charges for 2-day shipping through Prime.
Since Shipping Pass hasn’t yet rolled out for all of Walmart’s customers, it’s tough to compare the two operations. However, we do know that only about 1 million best-selling items are available through Shipping Pass, or 19 million items less than Prime offers its customers, which is likely to hurt Walmart’s program.
For now it seems like Amazon’s number one spot in the e-commerce world is safe, though Walmart will continue to work to boost its online sales growth, according Neil Ashe, Walmart’s global eCommerce president and CEO, in a statement to investors.
“Our investments started to enhance our customer experience during the fourth quarter across digital and physical, and we saw good sales in markets around the world,” Ashe said. “We made great progress on our priorities, including our global technology platform, next generation fulfillment network and the integration of digital and physical.”