Wal-Mart Stores, Inc. (NYSE:WMT) has shelled out billions to boost its Web platform in order to rival Amazon.com, Inc.(NASDAQ:AMZN) However, shareholders may not want to believe that e-commerce sales are tanking. The Bentonville, Ark.-based retailer reported Thursday that e-commerce sales grew 8 percent in the fourth quarter, down from 10 percent and 16 percent in the third and second quarters, respectively.
Amazon reported last month that its combined retail sales in the fourth quarter rose 20 percent to $33 billion.
Wal-Mart’s e-commerce sales growth rate of 8 percent trailed the industry average of 9 percent during the holiday period, data compiled by the National Retail Federation shows.
In total, all online retailers reported sales of $105 billion in the festive period.
Wal-Mart doesn’t divulge the value of its online sales and is yet to indicate when it will start doing so.
Wal-Mart blamed the slowdown to intensifying competition in the U.K. along with economic recessions in China and Brazil. However, its sales in the U.S. market rose faster than the entire company’s total sales.
“Their eyes were very big, and you can’t necessarily blame them for Brazil or the U.K. or China, but they weren’t careful and conservative in their view of what e-commerce was going to do,” notes Meredith Adler, a Barclays Plc analyst, in a statement to Bloomberg.
Ms. Adler is of view that Wal-Mart is currently making losses in its e-commerce platform and is yet to disclose when it will start turning a profit.
Reasonable explanations aside, investors are getting impatient to see results as the company prepares to use over $1.1 billion on e-commerce in 2016.
Despite its monstrous marketing expenditure, Wal-Mart loses out to Amazon mainly due to its poor pricing and selection. This saw it lose out to Amazon during the holidays in pivotal selling categories such as toys and housewares and electronics.
Wal-Mart also lost customers looking for certain items to Target Corp due to its high prices, data by research firm Boomerang Commerce shows. Amazon also attracted more customers due to its wider variety in virtually every category, when compared with Wal-Mart.
Wal-Mart Still Retains Edge in Groceries
However, all isn’t lost, as Wal-Mart has a longstanding advantage its groceries division. The company has boosted the capacity of its online grocery shopping platform to reach potential customers in 150 locations spread across 20 major U.S. cities. This has resonated with customers as they can easily order online and pick up the items at the stores while still inside their cars.
Still, it isn’t time for Wal-Mart to rest on its laurels, as other competitors are closing in. For instance, Amazon has been experimenting with its own grocery delivery system that could rely on drones, while Google could potentially join in the fray with its self-driving cars.