On Air Now

Listen

Listen Live Now » 93.7 FM Fargo-Moorhead

Weather

Current Conditions(Fargo,ND 58103)

More Weather »
69° Feels Like: 69°
Wind: SE 5 mph Past 24 hrs - Precip: 0”
Current Radar for Zip

Today

Partly Cloudy 75°

Tonight

Mostly Clear 61°

Tomorrow

AM Thunderstorms 75°

Alerts

Wal-Mart counting on Latam success to drive US online strategy

By Siddharth Cavale

(Reuters) - Fernando Madeira comes to his new job as head of online business for Wal-Mart Stores Inc with a reputation as an e-commerce whiz, having engineered a surge in the retailer's online sales in Latin America.

In his enlarged role, the Brazilian company veteran will face a more formidable challenge - taking on Amazon.com Inc in the far-more developed U.S. online marketplace, where the world's biggest retailer is yet to make its mark.

Wal-Mart announced Madeira's promotion on Monday, two days after unveiling more aggressive plans to integrate e-commerce with its sprawling network of brick-and-mortar stores.

Madeira's job, from next week, is to make that strategy work.

The goal of generating a bigger chunk of revenue from e-commerce has assumed more urgency for Wal-Mart as it struggles to revive sales in the United States.

The company's U.S. same-store sales have fallen for five quarters in a row.

Under Madeira's watch, Wal-Mart increased its online sales in Brazil at twice the rate of the growth in the overall online market, according to an internal memo obtained by Reuters.

Reasons for the surge included a sharp increase in the number of products available and improved order fulfillment - the process that starts with ordering and ends with delivery.

In the United States, Madeira will have to do more than mimic Amazon as Wal-Mart plays catch-up.

Wal-Mart reported online sales of $10 billion in 2013 - less than 3 percent of overall sales - compared with Amazon's online sales of $67.85 billion.

Wal-Mart says it expects online sales of $13 billion in 2014 - a growth of 30 percent. Analysts generally expect Amazon's online sales to grow more slowly than that.

Amazon controlled 25.8 percent of the online market share in the United States in 2013 while Wal-Mart had 3.4 percent, according to e-commerce tracker Internet Retailer.

CROWD SOURCING AND DRONES

Still, Wal-Mart has some advantages, including its size and widespread physical presence.

Wal-Mart is already experimenting with using trucks as pickup points for online orders, and is testing a scheme to allow customers to order groceries online and pay with cash at its stores.

The company is also exploring a way to crowd-source deliveries, seeking out customers at its stores to make deliveries to online buyers in return for discounts.

Amazon, with no physical stores, has none of those services.

Some of these trials may not pan out.

But they do show the priority that Wal-Mart Chief Executive Doug McMillon is giving to e-commerce.

In his role as Sao Paulo-based CEO of Wal-Mart's e-commerce business in Latin America, Madeira went up against established regional giants such as Brazil's MercadoLibre Inc and B2W Companhia Digital.

Walmart.com Brazil grew into one of the largest e-commerce companies in the country after Madeira took over in 2012.

Traffic surged four-fold as the online sales force tripled to 1,000 in 15 months and consumers took to a revamped website.

Madeira, whom Wal-Mart declined to make available for an interview, will continue to oversee Latin America from San Bruno, California, where Wal-Mart has its online headquarters.

Amazon is not sitting still, however.

The online retailer has started grocery deliveries in Seattle and Los Angeles and is firming up plans to use drones to deliver packages faster to customers. It also plans to launch a marketplace for local services.

And both Wal-Mart and Amazon face a formidable competitor in Chinese internet giant Alibaba Group Holding Ltd, which launched its first online shopping portal in the United States on Wednesday.

"Wal-Mart seems to be embracing changes faster than in the past and faster than might be expected for a retailer as big as Wal-Mart," Stifel Nicolaus analyst David Schick said in a note.

"(But) sheer size and inertia at Wal-Mart means it will take a lot for talk of change to become return on invested capital."

(This story was corrected to insert words "more aggressive" in third paragraph and "groceries" in paragraph 14)

(Editing by Feroze Jamal and Ted Kerr)

Comments