The challenges that retailers face leading up to Christmas 2014 – Part 2

Online SalesIn the first article of the two-part series of articles published last week, we commented on the challenges that conventional high street retailers face in the run-up to Christmas.  In this week’s article, we are going to be taking a look at the online retailers in particular, retail giants like Amazon and  Walmart who are one of the leading conventional and online retailers.

Amazon UK prepare for the Christmas shopping spree

The Christmas festivity portends a huge surge in consumer buying activity. It squeezes several months’ worth of shopping into as many days. In Amazon in the UK, during their busiest day of last year’s Christmas shopping spree they took orders for 4.1 million line items in just one day; that’s a staggering 47 items being ordered very single second! Such is the power of the Internet.

But of course all of that that “virtual” power has to be backed up by conventional power too, in the form of physical labor. To cope with the Christmas rush this year Amazon UK is taking on another 13,000 temporary workers. This figure is also in addition to having recently taken-on another 1,000 permanent employees. To put this into perspective, they employ 6,000 members of staff on a permanent basis to cover the ordinary order processing rate throughout the year.

How Amazon US performed during Christmas 2013

In the US last year (2013), Amazon recorded even bigger total sales. The run-up to Christmas in the US is signaled by Thanksgiving, followed immediately by Black Friday and Cyber Monday. This busiest weekend alone in the Christmas shopping calendar in North America, saw Amazon US net over $45 billion!

Amazon, which was originally launched back in 1995, has won a widening slice of the retail market from conventional high street retail over the years. It owes this achievement to its aggressive pricing policy, its huge stock of line items, and its rapid delivery service.

Walmart shapes to meet the Amazon challenge

US giant retailer Walmart can’t afford to let the grass grow under its feet. They didn’t get to be where they are in the marketplace today by standing by and admiring how well the likes of Amazon are doing. They initiate their own aggressive policies too, aimed at retaining and trying to increase market share, as the threat coming from online competition continues to grow.

Walmart extend price match offer hoping to boost Christmas sales

Although Walmart reported its first like-for-like sales growth figures in almost 2 years, the retailer is battening down the hatches in preparation for what they believe could be a lean Christmas sales period. In an effort to pick up the gauntlet thrown down by online retail competition, Greg Foran, Walmart’s President and Chief Executive, announced that the price matching offer aimed at competitors like Amazon, would be extended to another 4300 Walmart stores in the run-up to Christmas.

Walmart forced into playing catch-up

It is testament to the immense power and potential of the Internet, that Amazon has made such big inroads into Walmart’s ivory tower of retail domination in recent years. In a statement that reveals Walmart’s concerns regarding the shifting sands, Jeremy King, the Chief Technology Officer at Walmart lands (Walmart’s e-commerce research facility based in Mountain View) said, “My biggest issue is playing the catch-up game.”

Over the past year, Walmart has substantially increased its investment in the online business arena, spending over $300 million in the acquisition of 5 high-tech companies since May 2014 and employing over 300 web engineers and code writers, both in the United States and in India.

Smartening-up their online act

Walmart is also reportedly aiming to establish a new program that will permit approximately 20% of its client base to be able to place online orders without either credit cards or bank accounts.

In an effort to meet the challenge thrown down by the likes of Amazon, Walmart is attempting to improve the links between store inventory, website and mobile phone apps, targeting making it easier and more reliable for clients to place orders online and collect their purchases from local stores.

Innovate, innovate, innovate

In another shift to existing policy, and aimed at the more fluent section of its client base, Walmart is also now selling more expensive, luxury items such as high-end televisions, exclusively online.

They’ve also developed a new app, which they call “Shopycat”. It uses Facebook to suggest gift ideas for friends and family, from the range of products on sale at Walmart.com. It’s early days yet, but 150,000 users have installed the app so far. It could well provide a welcome boost to Walmart’s Christmas sales.

How will the major combatants fare?

These are all examples of how the Internet is driving innovation in both the online and the conventional markets. It will be interesting to carry out a review post-Christmas to see how the major players fared in the battle for the Christmas consumers $. Watch this space….


What new online innovations have you spotted to attract the Christmas gift shopper? Have your say on the comments section below

 

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