Wal-Mart launches its latest weapon today in the battle to win online shoppers -- Shopycat, a social app that makes gift selections for friends, family or anyone connected through Facebook based on their interests and profile.
Certainly the war of the Big Box retailers is over and Wal-Mart won, hands down. But in the war for online sales, Wal-Mart's greatest adversary may be itself as it attempts to get its 3,800 U.S. stores and millions of employees working together with Walmart.com. Although the retailer is taking steps in the right direction -- Shopycat its latest -- it still has a long way to go.
As online sales have soared overall, Wal-Mart (WMT) shoppers have failed to flock to the web in any sizeable number – online sales are estimated to account for just 2% of its revenue according to Deutsche Bank Securities, or about $8 billion. By comparison, Amazon's revenue leapt 40% in 2011 from the year prior to $34.2 billion.
That's why Wal-Mart has a renewed focus on leveraging its massive bricks-and-mortar presence to re-invent itself online. That means pushing customers to pick up online orders at Wal-Mart's stores, crediting store teams with online sales to turn them into a digital sales force and potentially delivering items purchased online from the local Wal-Mart, hitting Amazon and other e-tailers on their speed of delivery. And it also means a hybrid of online apps and digital tools -- but only when they fold in with offline too.
"There's a lot of value that we get online and a lot of value in the physical store, and at the end of the day we expect the best of both worlds," says Venky Harinarayan, who heads @WalmartLabs. "It's not going to be one channel."
Harinarayan's division, @WalmartLabs, is what most people think about when they consider Wal-Mart's future. The Wonka-esque digital outpost launched from Wal-Mart's $300 million purchase of a social advertising hybrid Kosmix in April. There, engineers are busy churning out social shopping apps, such as Shopycat, which makes gift recommendations by data-mining Facebook profiles. Next up are a raft of social apps that will let customers connect with each other and to Wal-Mart staff, as well as find products or ideas when they are physically in a Wal-Mart store.
But even if @WalmartLabs is wildly successful, social apps alone won't make Wal-Mart an online contender. If the retailer wants to win online, it will happen because -- and not in spite of -- its physical boxes.
