"Walmart is making a serious play at being a tech company," said Amir Konisberg, CEO of e-commerce software company Twiggle and former vice president of a UK-based online grocery store. "It's not a matter of whether Walmart could become Amazon," he added—the two companies are in the same uncharted territory of mixed-channel retail, as Walmart strives to gain digital market share while Amazon sets its physical footprints.
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"Which companies will create continuity of experience, we won't know for a while," Konisberg told TheStreet. "It might be in Walmart's favor that it's been around for so long and knows its customers well."
Since purchasing Jet.com for $3 billion and tapping its CEO, Marc Lore, to head Walmart's e-commerce platform, Walmart reported a 60% increase in online sales in July year over year, it announced during its annual investor meeting on Oct. 10. On the same day, Walmart affirmed its fiscal 2018 outlook for adjusted earnings of $4.30 to $4.40 a share and projected a 3% uptick in sales in 2019, including a 40% jump in e-commerce sales.
In some ways, Walmart already holds an edge over Amazon in innovation and experimentation, said Jonathan Opdyke, the chief strategy officer for commerce marketing platform Criteo.
"It was a reset for Walmart.com to bring in new talent," Opdyke said of Lore, the founder of Jet.com, who joined Walmart in September 2016.
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Walmart is also dipping its toe into voice shopping through a partnership with Google, which means that anyone who buys a Google Home device can shop the stores' products through the voice-activated speaker—positioned to be a foe of Amazon's Echo.
In the summer, the retailer unveiled a series of home delivery programs, such as its partnership with smart lock company August Homes that would enable delivery people to not only bring customers' groceries to their homes but also to place them in their refrigerators, or its Uber program in which Walmart employees would drop off online orders on their way home from work.
"I love everything Walmart is doing right now," Michael McDevitt, the CEO of meal kit startup Terra's Kitchen, told TheStreet in September. Terra's Kitchen was among the meal kit companies that Walmart courted this summer to be featured on its website come December, he said.
Caution AheadThe pace at which Walmart is introducing products and programs, according to Konisberg, points to a startup sensibility. But while its progress is undeniable, Walmart and its stock are not invincible. For shares to continue rising while also implementing its tech initiatives wider scale, Walmart must convince its shareholders to think like Amazon shareholders.
"Amazon's shareholders are unique because they haven't looked at profitability, they look at long-term potential," Konisberg said. "Because Amazon starting [on] Day One has operated at zero profit."
For now, Walmart is making considerable profit. It brought in $91.5 billion in gross profit between May and July this year, and a net income of $6.2 billion in the same period. That's compared for $14.5 billion in gross profit and $921 million in net income for Amazon between April and June.
So far, Walmart has rolled out only few of its tech developments on a national level. Doing so would not only require patience in watching the balance sheet, but also painstaking care in scaling out.
"Retailers very frequently are able to execute a new program in a small footprint, but bringing it to scale is much harder," said Joiner, pointing to Walmart's store pickup function, which garnered complaints of long wait times in 2015 when it expanded the program.
"As they scale out, they must focus on change management and employee adoption," she added. "When you're selling convenience to a customer you must always come through on the convenience promise."
"Customer service," she added. "Successful execution will take training in customer service. Otherwise, the longevity of a product like home delivery will be short-lived."
Editors' pick: Originally published Oct. 18.