business news in context, analysis with attitude

Fortune has a piece about how analysts Cowen & Co. view the e-commerce prospects of both Walmart and Target, giving the latter a slight edge, largely, it seems, because it is smaller snd more nimble.

The story says that both were latecomers to the e-commerce game, and "paid a hefty price for that tardiness, losing market share to online retailers like and nimbler brick-and-mortar competitors. While they both still have a lot of catching up to do—each retailer gets about 3% of sales through digital commerce, compared to 6% of retail being online industrywide—they have made huge strides. In the most recent holiday quarter, digital sales at Target rose 40%, while those at Walmart jumped 18%.

Both companies will continue to pour a fortune into their e-commerce horsepower. Target last week said it would spend $1 billion this fiscal year on beefing up its digital capabilities—as much as it is spending on its 1,800 stores and expects e-commerce sales to rise 40% ... Wal-Mart, whose U.S. sales are four times greater than Target’s, plans to spend about $2 billion on e-commerce this fiscal year. Both companies are also preparing for the next frontier in e-commerce, such as same-day delivery."

The story goes on to say that Cowen & Co. gives "Target a slight edge over Wal-Mart thanks to its lead in mobile commerce (shopping and purchasing done via a smartphone)," while warning that "Wal-Mart was a strong competitor. (Wal-Mart, which gets more than half of its sales from grocery, is already testing grocery pickup for orders placed online. For Target, that will come later because it will spend the next year or so updating its food offerings, which currently generate one-fifth of sales. Food is one of the least underdeveloped areas for e-commerce.)"
KC's View:
It never is good to be late to the party, though it matters less if you've got a ton of money with which you can buy your way into the competition. Hard to say which one will be a strong e-player in the long run, and maybe it really doesn't matter ... they're both going to spend lots of cash to drive their digital businesses so they can be relevant to their target customers. It will be the relevance of their offerings, I think, that will tell the tale of long-term success, as well as how well their sites use the technology to engage with shoppers and create a sense - even an unconscious sense - of a community.

That's what I get with Amazon, and that is what they have to try to achieve.