
Conflict at Walmart threatens its ecommerce battle with Amazon - laurex
https://www.vox.com/recode/2019/7/3/18716431/walmart-jet-marc-lore-modcloth-amazon-ecommerce-losses-online-sales
======
taneem
Stories like this are often instigated by someone inside the organization with
an agenda. They reach out to a journalist, give some quotes anonymously, and
put them in touch with others in the company that are allies and will also
give supporting quotes.

This article feels like an article designed to pressure Marc Lore to leave.

Losing $1B on $22B in revenue, after just 3 years of really starting this bet
is nothing!

~~~
kjaftaedi
Maybe it's my limited experience, but it always seemed to me that the people
that shop at walmart genuinely enjoy the idea of shopping at walmart (going to
the physical store to get a good deal on a product) and aren't the type to buy
walmart products online.

Their products aren't even that good, surely more of them aren't going to hold
up to online competition either.

I also never got the feeling that walmart shoppers are "i need same day
delivery" types. they're in it for the bargains. You tell them an option is
going to be slightly cheaper, they'll go for it.

I feel like they should keep the focus on their brick and mortar stores and
forget about trying to compete with amazon.

~~~
hkmurakami
I now trust Walmart more than Amazon for brand name goods that are easily
counterfeited since they don't mingle inventory. Never thought I'd say that.

~~~
fkdo
Walmart has been known to put pressure on brands to reduce the cost of their
products. Sometimes they can find the cost savings in the economy of scale of
doing business with Walmart. Sometimes they find cost savings by making a
cheaper product.

Buying something from Wal-Mart is far from a seal of quality.

------
ENOTTY
Wait, so Walmart is about to give up on a 3-year-old strategic bet because
they're losing to a competitor that had a 20 year head start[1]? This seems
like classic short-term thinking in an ossified organization.

That said, credit to them for identifying an area of strength (grocery
delivery) and leaning into it hard.

[1]: Amazon was founded in 1994, Jet.com founded in 2014.

EDIT: Also wow, this article needs an editor. Is the CEO's last name McMillon
(5) or McMillion (2)?

~~~
skybrian
To me, it doesn't sound like a question of giving up. There is a dispute over
how much money to spend on infrastructure while pursuing growth. Do they spend
lots and lose money for a while, or go with a slower build that's profitable?
Apparently the high-spend advocates talked to the press as a way of pressing
their case?

There's no way for us to know who is right based on reading one article.

~~~
tracker1
Given Vox's hyperbolic nature in terms of articles and agendas, I'm not sure
how big an issue it actually is. Beyond this, I'm frankly surprised it's
_only_ 1b this early on... Compared to most startup initiatives, accounting
for scale, it's really not bad at all.

------
fredsanford
Loading walmart.com on most of my machines reminds me of loading image heavy
sites in the early '90s over a 9600bd modem...

I am unsure how they reach this "achievement." I didn't think any close to
modern website could act like ESPN in loading 32453235 scripts per page...

And please... Fix it so I can search for in-store only items.

~~~
dmix
Jet.com ([https://jet.com](https://jet.com)) on the other hand has a very nice
and fast design built with Next.js
([https://nextjs.org/](https://nextjs.org/)).

~~~
richajak
The site is ok, but loading images takes forever.

~~~
dmix
Agreed. The top-end images on the homepage is way too heavy. The e-commerce
subpages are slightly better image-wise:
[https://jet.com/c/fashion/men/shoes/5209961250?experienceId=...](https://jet.com/c/fashion/men/shoes/5209961250?experienceId=24)

The main problem is most of the images are extra large and poorly optimized
(they are all preloaded it seems, as Next.js does automatically). Even on my
fast fiber connection it flashes.

For example, this product image is 63kb:

[https://jetimages.jetcdn.net/md5/f442c4124ca2fb7537503a592a7...](https://jetimages.jetcdn.net/md5/f442c4124ca2fb7537503a592a79c683?odnBound=700)

But on the page it’s only loaded 360x360 px but are downloaded at 700px.

------
vishnugupta
There's no mention of Walmart's recent acquisition in India[1] where they
poured $16 billion to buy 77% stake in Flipkart. What's interesting is that
there's no profit in sight for Flipkart (or Amazon.in for that matter). Which
means they'll continue to bleed money. Especially as the Indian economy is
showing signs of a major slowdown.

~~~
tsjq
I too have similar thoughts . worse is soon after Walmart's acquisition of
Flipkart, the govt came up with new ecommerce rules & regulations that made
things really tougher for Amazon and Flipkart (there are widespread rumors
that these rules were brought in to help Reliance Retail's ecommerce wing) .
and not a single mention of this situation. 16Billions isn't small, even at
Walmart's scale.

------
forinti
I stopped buying online at Walmart Brazil because its third-party sellers were
awful and Walmart just ignored my last complaint (I bought a keypad and got
one that was different from the one advertised). I guess I wasn't the only one
who was unhappy with their service.

Their stores are also pretty shabby. They entered Brazil buying Bompreco
(which was not well run at all) and then they bought the Portuguese Sonae
(which was reasonably efficient) and proceeded to weed out the good parts in
order to homogenise the whole operation at the lowest possible quality.

Sonae had a really good POS on which you could even sell advertising space. It
was replaced by a POS that looks like a 40 column DOS application.

~~~
marcosdumay
Walmart and Magazine Luiza were the only 2 large stores that I accepted buying
online from (Walmart doesn't sell online anymore in Brazil). I just never
brought anything from 3rd party sellers, on any site (except the ones that
only sell 3rd party things, that have good reputation management systems).

I have to say, I know of no large store with any passable POS on Brazil. They
are all horrible.

~~~
muliwuli
im from europe and never seen wallmart in my life, but i wonder why are people
commenting on POS system ? how is this related to your experience as a
customer ? Do you mean POS system when doing self-checkout or something else?
i'd be curious to know what you mean by that or by "no large store with any
passable POS in brazil" ? thank you.

~~~
forinti
With regard to the Sonae buyout, the old POS had more options. You could even
pay your bills or buy cellphone credits. The new one didn't even accept
payments from the state bank (AliExpress, from the other side of the world is
integrated into the state bank of Rio Grande do Sul).

It seems that WM just goes into markets with not enough planning.

------
zmix
“It’s taking longer than I thought it was going to,” McMillion told analysts
in October of the e-commerce unit’s profitability, “and I have been surprised
at just how many brands there are out there to get signed up. ... Who knew we
needed 2,000 of them. I didn’t.”

What a naive CEO!

------
droithomme
Walmart's done a good job of trying to carry as many things on its site as
Amazon. I find most things listed on both sites. I also like the idea of free
ship to store and use that.

The problem is the same that Target, and Barnes and Noble all have in
competing with Amazon. Their sites aren't as good. They are spartan,
uninteresting, hard to navigate, difficult to find things, and often so slow
as to be unusable.

In short their developers, development managers, server staff, etc, aren't
good enough.

On Amazon I can find what I need, the site looks good in all browsers
including old ones, it doesn't bog down the CPU, stall or crash the browser,
and products can be found using their own search mechanism without having to
resort to using Google.

~~~
softwaredoug
Barnes and Noble probably needs to realize it’s core value is the in store
experience of leisurely browsing at a kind of “third place” away from
home/work. Honestly I don’t know anyone who has bought a book on B&N online,
but know lots of people who just want to hang out at a Barnes and Noble and
read/explore. That was the appeal in the 90s, that’s still the appeal. Nook
and e-commerce are just distractions from that main differentiator.

I wonder how many other places are just being bad amazon clones when their
core value is something different...

~~~
Mediterraneo10
> know lots of people who just want to hang out at a Barnes and Noble and
> read/explore.

Maintaining a large inventory of books is a financial burden for bookshops.
For that reason, most massive bookshops in North America and Western Europe
have slashed their book inventory heavily compared to the 1990s. In the place
of books, they prefer to sell trendy things like vinyl records, Kikkerland
products, teas, etc.. However, while a customer can spend a few minutes
looking at what’s available, this kind of inventory does not offer many
opportunities for “exploring”.

Also, even if customers would not order from B&N online, they might still
order a book they see at B&N from Amazon, perhaps even while they are inside
the B&N. Smartphones allowing customers to browse in your store and then order
a desired item for cheaper from your competitor, were not yet a thing back in
the 1990s when B&N was in its heyday.

~~~
softwaredoug
This may all be true, but I feel like the solution is somewhere in building on
the brands strength (as a 3rd place) instead of trying to be bad Amazon.

------
gedy
I'm genuinely curious why an established business with supply chains, etc
would lose 1 billion dollars a year in an ecommerce effort. Why? Selling below
cost?

------
ilaksh
The Amazon model doesn't "scale" to multiple companies because it is winner
take all. It's a platform.

What could become an alternative would be a public decentralized protocol that
many different retailers, warehouse operators, and delivery drivers could plug
into. That is the sort of thing that could give consumers the selection of
Amazon without putting control over everything in the hands of one company.

------
tracker1
I'm not sure Walmart really needs "millions" more products. Amazon's largest
problem are low grade, poor quality goods and actually being able to choose
between them all. If Walmart can cover a significant number of categories with
a couple of known and quality options, they can definitely make inroads.

Walmart also has a huge network of actual stores, and I've ordered more than
once for delivery at a store. The bigger issue is mindshare and branding. I
often don't think to look for something at Walmart and it's often only in
frustration of Amazon's abundance of choice or other issues I'll think of
Walmart.

Beyond this, there are lots of other things that are just there at Walmart,
and often don't need delivery to me, the store is enough. Walmart, iirc,
covers something like 85% of the U.S. population with a store within 5 miles.
That shouldn't be underestimated.

------
Alupis
The problem with Walmart and ecommerce are one of self-cannibalism.

Walmart.com is not Jet.com. They actually compete against each other! Why any
corporation would run two separate ecommerce operations that compete is beyond
me.

\- When Walmart bought Jet.com, they already had Walmart Marketplace, which is
very much like Amazon in that it's products stocked, sold and shipped by
Walmart themselves - but also many 3rd parties which stock, sell and ship on
Walmart.com too.

\- Just like on Amazon - most customers are not aware they're not buying
directly from Walmart. Unlike Amazon, there's no built in messaging system
(you end up directly emailing customers, and until recently they didn't even
proxy the email addresses - meaning you obtained customer's real email
addresses). Returns are sloppy and painful for the seller to handle, and the
Seller Central UI hasn't changed in years. It's a "modern SPA" website, but
each button click must be doing some poorly designed queries or something
terrible, because each view takes multiple seconds to display (showing a busy
spinner gif while waiting). This makes doing trivial things very painful in
the UI.

\- Walmart.com's API isn't stable either. It's on version 3 now, and still
seems to lack important features like advanced reporting - features Amazon has
had for the decade we've been selling there. When version 3 of the API rolled
out, they gave everyone a months notice that all previous versions would be
"deprecated" \- although someone at Walmart things deprecated means turning it
off completely. This left anyone foolish enough to integrate with this clunky
API 1 month to rewrite everything since it was a major change.

\- You still have to be invited to sell on Walmart.com. Unlike Amazon - not
anyone can just apply for an account and start selling. This is a two-edged
sword, of course. While it cuts down on random people selling out of their
garage - it does limit the diversity of products and sellers on Walmart's
Marketplace - and ultimately revenue Walmart.com can bring in.

\- Walmart offers no "Fulfillment" options for their 3rd party sellers. While
this is currently not necessary, since you must be a legit ecommerce business
of a considerable size to even be invited to Walmart.com, it would be a great
option for many to help cut down on delivery times and shipping fees by
stocking some products on the other coast, or throughout the country. Many
large operations on Amazon take advantage of the FBA program specifically for
these reasons.

Now speaking about Jet.com - I'm not sure why Walmart didn't fold them into
the Walmart.com branding. It's a disaster. It's been 2 years since we
seriously looked at Jet.com, perhaps some things have changed - although I
have my doubts due to how Jet.com wanted to operate.

We also have a Jet.com account - but chose not to participate because the
barrier to entry was too high for such low projected sales.

\- Jet.com requires API use to do anything. There is no Seller Central UI to
manage products or orders.

This requires an API to even list a product. No CSV or Flat File uploads,
which both Amazon and Walmart allow. No manually editing product details for a
listing, or manually reviewing your orders via an Order Manager page.

While that may be good in that it makes the barrier to entry high enough to
keep out casual garage sellers - it also kept out larger profitable operations
like us. We took one look at it, reviewed their API, and decided it wasn't
worth the development effort to get a handful of sales each week. At the time,
there were no good integrations that we could just pay for either - not to
mention they wouldn't integrate with our ERP software either - so we'd still
have to spend the development time anyway.

Essentially, Walmart Corp is trying to run two, competing ecommerce websites -
both with serious flaws that prevent either one from being easy or enjoyable
for their sellers. Being customer-centric is great, but you have to at least
make sure it's easy for your sellers to manage their operations on your
platform - otherwise they will just choose to not participate or put enough
energy into the platform to make it really great.

~~~
jacques_chester
> _Why any corporation would run two separate ecommerce operations that
> compete is beyond me._

I imagine the same reason that Ford bought Jaguar. Segmentation.

~~~
Alupis
It's a bit different here though.

Walmart bought Jet back before Jet had any real market share. Most figured
they bought Jet to aquire their technology and people, namely Jet's founder.

And there's nothing shared between Jet.com and Walmart.com - unlike Ford being
able to build Jaguar's in the same factory, or benefit from shared economies
of scale. Walmart doesn't even sell on Jet.com, it's purely 3rd parties.

------
cavisne
Was jet.com ever a thing?

The brand means nothing to me, where walmart.com does at least have some brand
presence.

I suspect it was simply the founders ego that kept jet.com as a separate site
(rather than focusing on walmart.com). That alone is a bad sign, how many
years have been wasted promoting Jet?

~~~
slips
It was a thing. I actually used it frequently to get household items and save
money on bulk orders. Then it got acquired by Walmart and I stopped shopping
there. Same with Bonobos.

------
digitaltrees
What a crazy world where Walmart is the underdog. Two vicious monopolistic
predators battling for ultimate pricing power.

~~~
sokoloff
It's a good thing there aren't more _monopolistic_ retailers vigorously
battling each other in the market...

~~~
digitaltrees
I get your snark at my use of monopoly for two companies but think about it.
One has a monopoly on physical retail in most of America. The other has a
monopoly over most e-commerce. Which ever wins will have a true monopoly over
commerce in general. Scary. And not “free market” capitalism.

~~~
0xffff2
I think the mere fact that I split my time between the Bay Area and rural
Oregon, yet never feel compelled to shop an Walmart comes close to disproving
the physical retail monopoly argument. The nearest town to my house in Orgeon
has a Dollar General, but it also has two local convenience stores that sell
some staple groceries. Prices are high enough that I usually drive down to the
nearest city, where I have nearly all the same retail options I have in the
Bay Area (and more, if I need anything resembling farm supplies).

~~~
digitaltrees
You don’t sound like the representative example of most consumers in most
communities in America.

~~~
kbenson
Dollar General has over 15,000 stores and most are in towns of less than
20,000 people. [1] I think perhaps you're assuming too much and working off
incomplete or obsolete information.

1:
[https://www.npr.org/templates/transcript/transcript.php?stor...](https://www.npr.org/templates/transcript/transcript.php?storyId=717664332)

~~~
digitaltrees
Dollars stores sell a subset of products not the full A-Z Thst amazon and
Walmart specifically target. Small towns used to have a fabric store, a
butcher, a florist, toy stores, auto parts. The list goes on. Walmart sells it
all, often with no real competition, the dollar store does not sell all of
those items.

~~~
kbenson
It's true that it does not sell all the items Walmart does, but it does point
towards Walmart having not quite as much of a physical space monopoly as you
presented.

It also points towards the ability of other companies to compete with Walmart
in niche areas (at least niche compared to Walmart). I could see a future
where a few chains each carve out a chunk of the more popular Walmart
inventory and out-compete Walmart on physical location, as Dollar General has
done.

You can kind of imagine them as CPU cache layers. In-town local stores are L1
cache with great speed but relatively poor choice for all but the most common
items, Walmart is L2 cache with good speed (not still slower for most, as it's
a ways away for the majority of people) and better selection, and the internet
is general memory with everything you might need, but slow speed. There has
been a major upheaval in the L! level because of both a major shift in how
close/fast and large L2 got (a shift from major cities to large complexes in
rural areas) and a _huge_ boost in general access (the internet), but I don't
think it's all played out yet, since I think there's still need at the local
level that's not fulfilled well anymore.

Sorry for the tortured analogy, but it did probably save time on both ends.

------
robertAngst
I read this article and I love the capitalism.

A company is losing money to give customers better service.

Its not selfless, but its a phenomena.

I have never enjoyed shopping more than with Walmart grocery pickup. And
Walmart online is superior to Amazon (cost alone).

Is it bad to employ low wage workers?

