Walmart Explores Routes to Conquering Amazon

At the parent company’s recent analyst meeting, Raul Vasquez, CEO, Walmart.com, stated a simple target for Internet operations, saying, “Our goal is to make Walmart.com the most visited and valued website that exists.”

No wonder Walmart was so anxious to bump heads with Amazon on books.

And if the rather old-fashioned booksellers who complained of the Amazon (AMZN) and Walmart (WMT) price war on anticipated tomes thought they would shame the company into changing its ways by writing to the United States Department of Justice about unfair competition and injury, they clearly didn’t know who they were challenging. In fact, at the meeting, Vasquez declared:

Many of you have heard about our most recent program in the area of books. The fact is, simply that we were the price leader in books. Any customer that came and bought books at Walmart.com was saving money, relative to buying those books elsewhere. And what we did with the 10 pre-orders for $10, and what we’ve done, really with the top 200 books, is make it even clearer to customers that if you want to save money in this difficult recession, the place to go and shop is Walmart.com.

Those independent booksellers might as well just say apology accepted and move on.

Yet, Walmart isn’t targeting the corner bookshop. Clearly, Amazon is in its sights and not just when it comes to books. Vasquez said Walmart looks to the online operation to expand access to its brand for consumers who are changing their shopping habits. From the company’s point of view, that means amending purchasing patterns to focus on the best deal all the time, which from that viewpoint, means on Walmart.

In its drive to usurp Amazon, Walmart has taken several steps. To provide a greater range of products, the company opened its website to partner retailers who are offering a million items through its auspices. That’s in addition to Walmart’s own virtual assortment. Vasquez noted:

We’re very, very pleased with how that’s gone so far. We’re going to add another eight to 10 partners next year, so you’ll see us continue to provide more assortment to the customer.

Recently, Walmart.com has expanded personal care and beauty, building on in-store and Internet programs that already are challenging drug chains and web-only wellness sites on prescriptions. To support those initiatives on the delivery side, it developed a 97-cents shipping program. To make it easier to shop, and to establish a higher profile on the website, Walmart.com created a Health and Wellness destination that launched even as the analysts gathered at the company’s Bentonville, Ark., headquarters. The dedicated web location divides a wide-ranging personal and health care offering into nine manageable categories including Beauty, Diet & Nutritional, Home Medical, Infant & Children, Massage & Spa, Medicine Cabinet, Personal Care, Pharmacy and Vitamins & Herbs. It also includes an Ideas from WebMD feature to make the site more functional and credible.

Yet, Walmart’s current web expansion focus on wellness shouldn’t distract from the bigger picture. As the addition of the web partners demonstrates, Walmart is attacking the online business in multiple ways. Vasquez discussed price leadership in his presentation to analysts during a meeting when the company’s vice chairman Eduardo Castro-Wright declared, “We will not be beaten on price.”

Vasquez also touted the company’s Site to Store program — which allows consumers to take delivery of their Walmart.com merchandise at its stores without paying a shipping fee — as a major competitive advantage. Vasquez said Site to Store represented a third of Walmart.com’s business when the service launched but has grown to 40 percent. And Walmart plans to improve how it conducts that business in the smaller, more efficient supercenters it’s planning.

When it comes to the big picture, it doesn’t take a death-defying leap of imagination to determine just whom Walmart is benchmarking its efforts against. And it wasn’t hard to understand how determined the retailer has become to leave its rival choking on Walmart.com dust when Vasquez told analysts at the meeting:

If you talk about just year-to-date, and you take the leading online company, so a company that all of you would be familiar with, and you look at what their growth rate has been in North America, year-to-date, we have been able to grow at 190 basis points faster than that company. So, online we feel very good about the progress we’re making in becoming the leading destination.

Wonder who that could be and what river it was named after? And is it actually becoming a Walmart world — from both a material and virtual perspective — if the company born of Bentonville can indeed outmaneuver its techno-generated rival? More on that in an upcoming blog.