Walmart is catching up to Amazon in holiday inventory
(BI Intelligence)
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Walmart's investment in its holiday inventory could be paying off as the mass merchant is catching up to Amazon when it comes to in-demand items and pricing, according to data from Boomerang Commerce cited by Internet Retailer.
Walmart boosted its online inventory ahead of Black Friday by more than half, which is giving it strength in the e-commerce market. However, the company may run into logistical barriers over the busy holiday season.
Walmart is closing the gap between itself and Amazon for the holidays.
In-demand items: Walmart.com is offering 66% of the 600 most popular toys available on Amazon this year, compared with just 46% during last year's holiday season. Moreover, Walmart is offering 68% of the most popular consumer electronics products, compared with 51% in 2015.
Pricing: Walmart is offering lower prices than Amazon on 78 of the 394 toys that both retailers are offering, and lower prices on 84 of the electronics products that both merchants sell.
But there are logistical limitations to Walmart's lift in inventory. While Walmart has notably stocked up on in-demand goods — adding 1.5 million televisions and 3 million video games, for example — the company could run into issues with fulfillment. A spike in order volume, especially in a short period like Black Friday, puts a strain on third-party logistics providers that only have a certain amount of warehouse space and trucks to house retail partners' orders.
If Walmart's inventory optimization leads to unexpected sales spikes, the company runs the risk that its fulfillment partners (i.e. UPS or FedEx) could experience delayed shipments due to the heavy volume. It would be wise for Walmart, and other retailers competing against the e-commerce giant, to put sufficient effort into back-end fulfillment operations as they look to keep pace with inventory.
There is also another option: click and collect. This fulfillment option that lets shoppers place an online order and pick it up at a store — is thriving in the UK. Over half of UK shoppers report having used this method in the past year, according to a survey from JDA & Centiro conducted in April 2016.
However, the US is far behind on the click and collect trend, with just 27% of consumers using the service. This is largely due to slower growth in mobile commerce, and specifically, the hesitancy shoppers feel about using mobile retail apps.
Retailers in the US can look to the growth drivers in the UK to help drive up their own click and collect sales. Most notably, mobile commerce and adoption by grocery chains are driving shoppers in the UK to use click and collect.
Nancee Halpin, research associate for BI Intelligence, Business Insider's premium research service, has compiled a detailed report on click and collect that breaks down the growth factors behind click and collect in the UK. It also discusses the retailers successfully implementing the fulfillment method, examines the of impact consumer behavior, and outlines some key steps that US retailers can take to replicate the UK's performance.
Here are some key takeaways from the report:
The UK's click and collect market is expected to grow 78% by 2020, to £8.2 billion ($10.6 billion). Meanwhile, it is expected to reach £5.3 billion ($6.8 billion) by the end of 2016.
Click and collect is benefiting from consumer adoption of mobile commerce in the UK. Mobile is a fundamental driver because it affords consumers more flexibility in the purchasing process. As a result, many UK consumers are purchasing goods on their mobile phones, and then picking them up on the way home from work, the gym, appointments, etc.
The service is particularly popular among grocery chains, with many of the UK's largest supermarkets offering click and collect. Since trips to the grocery store are made frequently and regularly, click and collect is a perfect fit for shoppers who want to avoid recurring issues like long checkout lines and crowded stores.
To grow click and collect in the US, retailers need to invest in their mobile presence and dedicate in-store resources to click and collect shoppers. Merchants should do more than just recreate the desktop browser experience on a mobile app — this includes employing tools like mobile loyalty programs, digital coupons, and social media integration.
In full, the report:
Sizes the market for click and collect in both the UK and the US.
Identifies the key growth factors that are making click and collect successful in the UK.
Discusses key players in the UK that are seeing success with click and collect.
Presents some of the challenges the US faces in spurring adoption.
Outlines future opportunities for US retailers to grow sales via click and collect.
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