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Walmart Beats Amazon at Its Own Game

The brick-and-mortar retail giant Walmart just made a big technology move.

Amazon (AMZN) started as a digital company, which has given it some advantages over rivals, like Walmart (WMT) , that had to move from the brick-and-mortar world to the digital one. 

By being digital first, Amazon has engineered its growth -- including its supply chains and distribution -- organically and purposefully while Walmart has been forced, at least partly, to adapt the infrastructure it had in place.

That's something the legacy Bentonville, Ark., retailer has done incredibly well, albeit not without some hiccups. Walmart began its true digital metamorphosis when the company paid $3.3 billion for, a company it shut down relatively quickly (about four years later). One could argue that Walmart never wanted; rather, it actually wanted its chief executive, Marc Lore, his executive team, and Jet's infrastructure.

One could also argue that $3.3 billion was a steep price, but Lore, with the support of Walmart CEO Doug McMillon, forced Walmart to invest billions in its digital future.

Saying that those efforts saved the company might be a little strong, but it's fair to say Walmart would be in a much weaker operating position had Lore not pulled its brick-and-mortar-based thinking into the digital era.   

Now, with its digital sales having grown by 11% in 2021 and 90% on a two-year stack basis, the company has a new tool that is shocking because it seems to have beaten Amazon to the punch.

Amazon and Walmart Have a Clothing Problem

Virtual try-on isn't a new idea. Warby Parker  (WRBY)  enables consumers to try on its glasses through its website while Ulta Beauty (ULTA) does the same for makeup. 

Using that same idea to try on clothing has been more elusive because exact fit matters. Amazon has even resorted to what would have to be considered old-school tactics for its "Try Before You Buy" program for Prime members.

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"Prime Try Before You Buy is a Prime-exclusive program where you can try eligible items from women's, men's, kids', and baby clothing, shoes, and accessories before you buy them. You have seven days to try the items at home and we'll only charge for the items you keep," the company shares on its website.

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That's not a technology solution. It's a clunky effort that involves mailing packages.

Walmart has a digital option that might help it sell more clothing through its app and website. 

Walmart Solves a Digital Problem

"I am excited to announce that, following our acquisition last year of Zeekit, creator of a leading dynamic virtual fitting room platform, we are now introducing the game-changing technology to Walmart customers," Walmart Executive Vice President of Apparel Denise Incandela wrote in a blog post. 

"One of the most frustrating aspects of shopping for clothes online is understanding how an item will actually look on you. With Zeekit, our goal is to deliver an inclusive, immersive, and personalized digital experience that will better replicate physical shopping."

Assuming the technology works well, Walmart essentially has made buying clothes digitally a better experience that will require fewer returns. That's a huge gain for the company -- returns are expensive -- but it also eliminates a customer pain point. Nobody wants to buy something and have to ship it back when it doesn't fit and/or look right.

"We are rolling out Zeekit technology to users of the Walmart app and, starting with the Choose My Model experience," wrote Incandela. 

"This feature currently offers customers the ability to select from 50 models between 5’2” – 6’0” in height and sizes XS – XXXL. Customers can determine the model who best represents their height, body shape and skin tone to understand how an item will look on them."

That's an interesting angle on a virtual try-on experience. Instead of the clothes being projected on you -- something that no company appears to have truly mastered -- Walmart will show you how the clothing looks on someone who has your body type.

Incandela also promised that Walmart would continue to grow its model selection with "nearly 70 additional model options launching in the weeks ahead to offer an even wider range of sizes, skin tones and hair colors."

Walmart does not plan to stop its virtual-try-on innovation with Choose My Model.

"We are also working to launch a virtual try-on experience for women’s apparel, moving with speed to bring this groundbreaking technology to our customers," Incandela added.