How Walmart’s $3.3 Billion Push Into Ecommerce Affects You

Walmart has long been the brick and mortar giant in the United States known for being extremely difficult to compete with. The company’s recent online push just got a dose of serious “rocket fuel” through its $3.3 billion acquisition of Jet.com. Will it be able to duplicate this stature online?

To help answer that question, the most logical place to look is Seattle. Since launching there in 1995, Amazon steadily captured ecommerce market share to become the undisputed “king of the space” — but instead of crushing the competition along the way (though it has claimed many retail victims), it has propelled small retailers to increased revenue through its channel partner program. Some retailers went so far as to give up their own sites and sell exclusively through Amazon.

So what happens now? Will Walmart’s investment in Jet.com wipe out the success online retailers have enjoyed by partnering with Amazon? Is the party over? The answer is a firm NO, and here’s why…

Jet.com and Walmart are low-cost leaders

One of the reasons Jet.com is a perfect acquisition for Walmart is because both companies share the same philosophy of competing primarily on price. Pricing is a vital component of its online strategy to be a low-cost leader and be effective at generating awareness and short-term sales. For most retailers, engaging in price wars is not a strategy that leads to long-term success.

Amazon is a perfect example of this. The company found success by undercutting competition, but has since shifted its strategy to make buying so easy that its customers no longer feel the need to comparison shop. Just last month, the company stopped listing MSRP on many of its items. Amazon’s current position as a trusted online retailer with stellar service, fast delivery times and fair prices is largely impervious to being undercut by lower prices from competitors — but it took 20 years to establish and turn a profit. Most retailers do not have that long to make money, so it is generally better to avoid ever competing primarily on price.

Walmart’s marketplace is taking new retailers

There is little doubt that Walmart is going to claim a larger piece of the online pie with its marketing muscle and brand equity, and it is inviting retailers to partner with it just as Amazon does. Similar to Amazon, Walmart has a channel partner program where retailers have the opportunity to sell and fulfill merchandise on its site. Jet.com also uses retail partners, so it is unlikely that the acquisition will threaten this model.

Integration with Walmart Marketplace is a seamless process for retailers that use compatible retail management platforms, and adding Walmart as a channel partner can be a valuable asset to boost visibility and revenue online. Retailers that have found success with Amazon and eBay should strongly consider adding Walmart to their online portfolios before Jet.com is fully integrated and introduces possible changes to the procedure.

The enormity of Walmart’s acquisition of Jet.com is sure to shake up things in the ecommerce universe, but there is no need to panic. It is unclear whether Walmart intends to compete on factors other than price, and if it does, that is likely years away. In the meantime, jumping on the bandwagon now is a good hedge against competition from Walmart and is likely to help boost sales at little cost to you.

Zeke Hamdani is Director of Web Services for Celerant Technology.

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