Amazon vs. Walmart: Which Is the Bigger Threat to Digital Retailers?

Amazon and Walmart may be locked in an endless battle for retail dominance, but to the 276 retailers surveyed by SLI Systems for its E-commerce Performance Indicators and Confidence Report H1 2018, there’s really only one true threat. More than two-fifths (41 percent) of retailers across the globe (and retailers in the U.S.) cite Amazon as a threat — higher than the percentage that reported similar sentiments the previous quarter. Even more telling, fewer companies (12 percent versus 24 percent the previous period) believe Amazon does not pose a threat to their business, reflecting how far the behemoth’s tentacles extend into the commerce landscape.

Even as Amazon’s threat level rises, fewer respondents see Walmart, and its Jet.com digital outpost, as a competitor of intimidating force — despite considerable investments in its digital footprint. The number of those who view the world’s largest retailer as a menace dropped to 8 percent, from 12 percent in Q3 2017.

The e-commerce optimization company polled retailers across the U.S., the U.K. and New Zealand to determine what digital merchants are prioritizing for 2018. E-commerce is booming, and apparel retailers hoping to cash in on consumer interest in shopping online are increasing their digital presence by offering more products and adding product lines, according to the report.

Overall, e-commerce expansion is slowing down from its torrid pace in 2017, when 84 percent of respondents said they’d be incorporating new products and lines. For the first half of this year, 78 percent of all e-tailers, and 71 percent of apparel and fashion-related firms, indicated they’re putting up more items on their websites. Though experts had predicted a lot of M&A activity for 2018, the year has so far yielded little in the way of deals and acquisitions. According to the SLI Systems report, just 14 percent said they’re planning one or many acquisitions for the calendar year.

Instead, the numbers point to online sellers putting an emphasis on buying or deploying new technology to enhance their digital storefronts. More than two-thirds (68 percent) said they were implementing new systems in the first half of 2018, higher than the 57 percent who had similar plans in Q3 2017. Maybe they’re overly confident in their investments, but retailers are optimistic about e-commerce revenue growth for 2018, according to the report. Not only does the overwhelming majority (91 percent) expect a jump in revenue, but retailers also think they’ll see a larger increase than in previous quarters. Thirty percent expect their digital businesses to produce “aggressive growth” (between 11 percent to 30 percent) compared with just 22 percent in Q3 2017.

For contrast, the percentage reporting expectations of “modest growth” (1 percent to 10 percent) fell from 58 percent to 49 percent. Note that among U.S. respondents, more (59 percent) are planning for modest growth than those (12 percent) expecting aggressive growth higher than 21 percent. Twenty-five percent of apparel merchants believe they’ll see growth above 21 percent, the report noted.

Expected revenue growth will benefit the 21 percent who also expect to see increases in per-order fulfillment costs, SLI said.

That begs the question: Are mobile commerce investments mature or are retailers slacking off in prioritizing phone-based channels?

Just 5 percent said investing in their mobile website is their most important initiative, a figure that plunges to 1 percent when asked about the priority of investing in their mobile application. While mobile may not be the No. 1 focus overall, most retailers’ financial investments are equal to (50 percent) or above (41 percent) last year’s levels.

“With only 2 percent reporting a decrease, it’s clear mobile remains integral to e-commerce success,” the report noted.

Retailers’ digital commitments reveal their interest in furthering efforts to personalize the consumer experience.

Most (57 percent) deploy marketing emails based on a consumer’s behavior online, making it the most-used personalization tactic, according to the report. Other top efforts include recommending products based on online behavior (55 percent) while roughly one-third (34 percent) either create offers based on online behavior or segment customers using demographic information. For apparel retailers, most are personalizing the journey but displaying category page results based on what the customer has been doing online.

Of course, retailers expect these personalization initiatives to translate into bottom-line results. The report said 60 percent expect their conversion rate to increase as a direct result of these efforts.

Editor’s Note: This story was reported by FN’s sister magazine Sourcing Journal. For more, visit Sourcingjournal.com.

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