Looking to further strengthen its position in ecommerce and enter the voice-shopping market, Walmart is joining forces with Google.
Amazon poses a competitive threat to bricks-and-mortar retailers and online retailers alike. In an effort to reckon with it, Walmart has formed a new agreement with Google to sell its products on Google’s online shopping mall, Google Express. Unlike an Amazon-style department store, Google Express is a collection of retailers, currently numbering more than 50, including Target and Costco. This will mark the first time that Walmart, the world’s biggest retailer, makes its products available online in the US outside of Walmart.com.
The main point of the venture, the two companies say, is to marshal for the way people will shop online in the future – namely voice-shopping. The goal is to pit Google Home, Google’s voice-controlled speaker, against Amazon’s Echo. Farther down the road, they would also like to get Walmart shoppers using Google Assistant, the artificially intelligent software assistant used in smartphones running on Android. According to Google, more than 20% of searches conducted on smartphones are currently done by voice. Voice-based shopping seems a logical next step.
Last year Walmart acquired ecommerce company Jet.com, and appointed founder Marc Lore as Chief Executive Officer of Walmart eCommerce US. Under Lore’s leadership, it has been focusing on strengthening its online business and making a number of enhancements to the Walmart.com shopping experience. It is also working on integrating the online business with its network of nearly 5,000 physical stores, for example by repurposing stores into e-commerce fulfilment centres.
“We are trying to help customers shop in ways that they may have never imagined”, said Lore. Thus far such efforts are meeting with success: Walmart reported a 60% increase in online sales in the second quarter, and attributed much of its overall increase in quarterly sales to online sales.
There are naysayers among analysts who, according to the New York Times, “question how Walmart will add to its core low-price retail business at the same time it is trying to manage bolt-on acquisitions.” Despite sales going up, Walmart’s profit margins reportedly slipped in the second quarter, due in part to its spending on ecommerce initiatives.
Will it all be worth it in the long run? “I am not saying Walmart is ever going to catch Amazon online”, said Craig Johnson, President of retail consulting firm Customer Growth Partners. “But instead of being embarrassed by Amazon, it can be a strong No. 2.”
