Wal-Mart Stores Inc (NYSE:WMT) Challenges Amazon in the Retail Battle

Wal-Mart Stores Inc (NYSE:WMT) reported its third quarter results recently, which beat analysts’ expectations by a significant margins, especially in the e-commerce space. The retailer reported 50% growth in its e-commerce sales even as it strives to compete with the leading e-commerce retailer, Amazon.com, Inc. (NASDAQ:AMZN).

Article Summary

Wal-Mart recently reported a 50% increase in online sales.

The discount retailer is well positioned to compete with Amazon in e-commerce.

Other retailers should emulate Wal-Mart in order to remain competitive.

Here’s the trading report on WMT.

Wal-Mart’s stock price rallied higher after the release of the stellar earnings report indicated that the retailer was gaining ground against the e-commerce giant. Wal-Mart was once the most respected discount retailer and was known as the killer of local stores.

The title of the largest discount retailer is no longer held by Wal-Mart, but goes to Amazon.com, which has risen in recent years to become the leading online retailer in many countries across the world. Amazon has posed a major threat to Wal-Mart given that it has popularized the online shopping experience, while at the same time offering low prices as compared to the giant retailer.

Wal-Mart recently acquired Jet.com, which is the platform it has integrated into its e-commerce strategy and is largely responsible for the growth of its online sales revenues. However, it is important to note that despite the 50% increase in online sales, the retailer’s overall sales increased by a mere 4.2%. This means that even as Wal-Mart grows its online sales, the sales at its physical stores are declining.

It is evident that Wal-Mart is gaining ground against Amazon in the retail space and the company is not stopping as it has reinvigorated its “order online, and pick up at the store” program, which has significantly improved its performance in the grocery sector.

Wal-Mart is gaining ground against Amazon in this crucial sector, while other grocery retailers such as Kroger Co (NYSE:KR) are losing ground to Amazon, especially after the acquisition of Whole Foods Market, Inc. (NASDAQ:WFM).

Other retailers who have not embraced an e-commerce strategy to compete with Amazon are likely to have an uphill battle in the rapidly changing retail environment. Many physical retailers such as Costco Wholesale Corporation (NASDAQ:COST) and Target Corporation (NYSE:TGT) are already feeling the impact of Amazon’s rise in the retail sector.

Wal-Mart seems to be better positioned to compete with Amazon as is likely to emerge as a major rival to Amazon in the online retail space as compared to other physical retailers. It remains to be seen what other strategies will be implemented by other retailers in order to compete with Amazon.

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