Walmart.com keeps on growing
By Anne D'innocenzio
NEW YORK — With a week to go before Christmas, division CEO Raul Vazquez says www.Walmart .com's holiday sales are growing two or three times faster than Web sales overall.
At that pace — and with 22 percent growth so far this year — the world's largest retailer is coming closer to dominating the Web the way it does cities and towns across the U.S. That would mean eventually dethroning online retail leader www.Amazon.com, whose sales hit $19.17 billion in the 2008 calendar year.
And that's precisely Vazquez's plan. Walmart.com already controls nearly 8 percent of online holiday retail traffic, behind only Amazon.com, which has 15 percent this year, according to Experian Hitwise, a Web traffic measuring firm that monitors visits to 500 merchants' sites.
Walmart.com — which in October started selling such personal-care products as diapers, beauty items and over-the-counter medication — has about 1.5 million offerings, including nearly 1 million that outside retailers sell through it. That's about 10 times more goods than a typical Walmart store.
Amazon's sales still dwarf those at Walmart.com, which doesn't report its results independently from the $400 billion in overall revenue at parent Wal-Mart Stores Inc.; Vice Chairman Eduardo Castro-Wright has said Walmart's online business generates several billion dollars a year.
But Vazquez said Walmart.com's growth has topped Amazon's by 1.4 percentage points in the first three quarters this year, though he declined to offer a specific sales figure. Amazon.com's sales rose 20.3 percent in the nine months that ended in September, which implies that Walmart.com's rose 21.7 percent for the nine months that ended in October. Vazquez said traffic to Walmart.com's book and DVD section more than doubled after he launched a highly publicized price war over top-selling books in October and then DVDs in early November that sent competitors like www.Target.com and Amazon scrambling to match its prices.
Vazquez, 38, has led the site since early 2007 at its office in Brisbane, Calif., which is near Silicon Valley and more than 2,000 miles from the company's Arkansas headquarters. Always seeking ways to boost sales, he hopes to further experiment with social media like Facebook and Twitter, especially as increasing numbers of Walmart customers get comfortable shopping online.
He also plans to integrate the Web business more with brick-and-mortar Walmart stores. Walmart.com customers already pick up about 40 percent of their orders at nearby stores for free. The company is testing drive-through windows in Chicago and Minneapolis areas where customers can pick up online orders like fast food.
Here are some excerpts from a recent interview with Vazquez.
Q. How do you feel about the year so far? How is the holiday season shaping up?
A. We have said in the past that our goal is to be the most visited and valued online retail site, and we feel very good about the progress. When we look at our growth rates relative to the leading online competitors, we are the fastest-growing among the online sites. The season continues to go well. TVs continue to do well. I was surprised in this economy. iPods are selling well, cameras, the Wii continues to do well, as well as the DS players, video games.
Q. Walmart.com made big waves when it started price wars on books, then DVDs. What was the strategy?
A. Before, anyone who was shopping from Walmart.com was saving money on books relative to any of the leading book sellers. But it wasn't until we put the program together in a way that was a little more compelling that we got people's attention. I think people stopped to think: "The same way I save money offline from buying from their stores I can do it online."
Our (book) business saw a huge surge, triple-digit increases in both traffic and sales, and it stayed high. It's now double-digit increases. It's good for our customers, and it's good for business. Our overall business also did very, very well when we launched that. Based on the success of that, we thought, "Let's do it in movies."
Q. What have been some interesting trends?
A. In this difficult economy, people migrate to value, and Walmart stands for value. We have certainly seen traffic grow year over year. The part that surprised people is that our customers have been more decisive than they ever have been once they're on our Web site. Other online companies are seeing higher shopping cart abandonment rates — that fewer people who start a purchase actually finish it. We are seeing the opposite. More people that start a transaction finish the transaction.
Q. How has the recession affected what consumers are looking for?
A. We are selling many more diapers than we thought we would. As a percentage of our personal-care business, it has doubled our expectations. So what we are learning here is that we have a busy mom who wants to have a company like Walmart.com provide more of her needs for her baby. So what can we do with wipes? What can we do with other adjacencies close to diapers at Walmart prices? When you tap into something, you try to figure out how you can do more of that.
Q. Tell me about yourself.
A. I grew up in El Paso, Texas. My father was a physician and my mother was a nurse. They left their whole family behind to improve their lot in life. That is a sacrifice that is incredibly important to me. The work ethic that they instilled in me is a big part of who I am. We had to be incredibly sick not to go to school. We had chores around the house. We were raised to be very respectful.
Q. How important is it for you to strike a balance between work and personal life?
A. I worked at startups and we all ran around thinking things had to be done yesterday. The number of hours you worked was seen as a badge of courage. But there were very few things that had to be done yesterday. If we had taken a more thoughtful approach about our strategies, companies could have been more successful. I don't think about adding work hours. It's more about feeling energized and feeling how I can bring the best of myself to work and bring the best of myself to my kids. I want to be able to go home and not be entirely spent.