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Wal-Mart optimistic on e-commerce, global growth

story by Kim Souza
ksouza@thecitywire.com

One customer, one Wal-Mart.

This new mantra sounds simple on the surface but it’s the key mission for retail giant Wal-Mart Stores Inc. in the near future.

Neil Ashe, CEO and president of Walmart Global eCommerce, said Wednesday (Oct. 10) the e-commerce division is the piece that makes the audacious goal possible as more people in the world have wireless access than indoor plumbing.

Roughly 87% of the world’s population is covered by wireless signals, with about 4 billion mobile subscribers, 700 million of those have smart phones and 540 million are mobile users on Facebook.

Ashe said Wal-Mart has uniquely served its customers for 50 years but technology has empowered the consumer and raised expectations like never before.

He said leveraging Wal-Mart’s size and customer base – 200 million per week – with its vast supplier and logistics networks, the company is poised to raise the bar beyond customer expectations.

That starts with recruiting the best talent, which is ongoing in the company’s e-commerce hubs of Silicon Valley, Sao Paulo, Brazil, and Bangladore, India. Ashe said the recruitment continues as the teams have a laundry list of items to accomplish. More recently, Ashe said the retailer figured out a way to monitor price across the internet.

“In 20 minutes we can know the price of everything we are selling around the world, relative to our competition. This is huge for a retailer committed to low price. Before we had this technology we were sort-of flying blind,” Ashe said.

He also spoke of the search engine that was built in-house over a 10-month period, calling it a “huge accomplishment” because it’s already having a measurable effect on conversion rates up 10 to 15%.

E-commerce revenue across the globe is expected to hit $1.3 trillion this year and on par with the social media and mobile usage.

Ashe forecast Walmart’s e-commerce sales to be $9 billion next year, excluding acquisitions. He said one-third of the world population is online, 37% of the global online population researches products daily and 48% uses social media to help them make purchase decisions.

Harnessing and analyzes all the available social data feeds is hard, but @WalmartLabs is doing it well, according to Ashe.

INTERNATIONAL HEADWINDS
Walmart International CEO Doug McMillion said e-commerce is dramatically changing the way retailers operate around the world. He said consumers are also connected via mobile technology which is turning the entire retail sector upside down and blowing the opportunities wide open at the same.

But the global landscape is interconnected in financial conduits that will likely keep any one country from breaking out on a tremendous growth run in the near term, according to McMillion.

He said the mega retailer’s bread and butter in the global operation lies in Canada, Mexico and the United Kingdom. In the future he would like the Big Three to become the Big Five that will include China and Brazil – both of which are works in progress.

McMillion said Brazil is a case study in how to implement the retailer’s low cost, low price strategy in a market with complex tax and compliance environment. Though Wal-Mart has been in Brazil since 1995, the low cost/low price business model has only recently been rolled out there. He said the early results are starting to show gains and he sees this work as a “case study” that will be rolled out in China, and perhaps India in the future.

Japan is a tough market as consumer sentiment is weak amid a slowing macro-economy, according to Scott Price, president and CEO, Asia. He said utility costs are running 12.5% higher in Japan as a result of the tsunami and greatly reduced nuclear power.

Price said Wal-Mart invested in LED lighting for stores and a number of refrigeration efficiencies and then rolled out a number of products for customers like personal fans, cold towels and LED lamps, which were a hit with customers.

Wal-Mart is building a foundation in its China operations with plans to transition to the everyday low price strategy following the Chinese New Year in January. The company estimates it will take more than year to roll it out.

Price said China has its challenges as a complex place to do commerce, with geographic disparities and talent scarcity. That said, he was pleased to tell the group that comp sales are trending at 5%, up from 2% a year ago. These better numbers came despite the fact there aren’t many encouraging signs in consumer confidence, he added.

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He said in China and throughout Asia, Wal-Mart will continue to focus on driving simplicity through its everyday low price and low cost strategies, while also taking local best practices and tailoring them to work in Wal-Mart stores.

In short, McMillion said, “Customers are under pressure around the world, they need us, and it’s Wal-Mart’s time.”

Despite the challenges, McMillion said Wal-Mart’s growth is outpacing the market everywhere except in China.

The company plans to add 20-22 million square feet of store space internationally in next fiscal year versus 21-23 million in this year.

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