Cyber Monday is quickly becoming a holiday shopping tradition in its own right. As the battle between online and traditional retail continues to heat up, the day has grown in significance to be even as big as Black Friday when it comes to kicking off the holiday season. And while many would anoint the Cyber Monday crown firmly on Amazon.com, Inc.’s (NASDAQ: AMZN) head, this year, the crown will go to a more traditional retailer.
And that would be Wal-Mart Stores, Inc. (NYSE:WMT).
Walmart will take on AMZN and other ecommerce firms while doing what it does best by beefing up its Black Friday deals … but online. It’s a simply strategy that could serious bear fruit and help the giant overcome the growing threat from Cyber Monday and Amazon.
In the end, Walmart’s plan to win Cyber Monday could be just what it needs to power its earnings during the critical fourth quarter for WMT stock.
Walmart Goes Old School
So how does Walmart take care of the Cyber Monday threat? By making it obsolete. At least that’s the hope anyway.
WMT will start unveiling special online “Cyber Week” sales several days ahead of the “unofficial official” shopping holiday. The discount retailer plans on starting those sales this Friday at midnight. This is in addition to any Black Friday deals that Walmart will be offering. Those specials on toys, TVs and other items will be offered online as well, starting Thanksgiving morning.
Its massive chain of physical retail locations will be open on Thanksgiving with Black Friday specials starting at 6 p.m. On top of all of this, Walmart has nearly tripled its online product assortment this year from 8 million to more than 23 million items.
The message to Amazon and other retailers is clear — “We’re going to get those sales first.”
And there’s good reason for WMT to take on Cyber Monday head-first. According to analytics done by Adobe Digital Insights, the online shopping holiday is expected to be the largest online shopping day ever in America. Sales are estimates to hit more than $3.36 billion — a nearly 10% jump over last year. More than 35% of shoppers are expected to start their holiday shopping, the second they finish their pumpkin pie. This echoes similar results from trade-group the National Retail Federation.
With every dollar important now when it comes to holiday shopping, Walmart needs to get ahead of rivals like AMZN or Target Corporation (NYSE:TGT) and capture those bucks.
Walmart Was Planning For This All Year
The move is shrewd and a pretty good way to stick it to other online retailers. And in essence, it’s what WMT has been doing over the last year or so. The firm has significantly beefed up its web and online presence. This has not only included adding deep discounts, but adding a ton of data analytics, experimenting with new logistics process from within its stores, adding a ShippingPass (an Amazon Prime clone) and buying out innovative ecommerce firm Jet.com.
The Jet.com purchase is particularly an astute move. Jet founder and CEO Marc Lore was the creator of Diapers.com and was credited with creating the idea of a reoccurring subscription service. Subscriptions and auto-shipping is a now a major source of revenue at Amazon.
Lore is now in charge of Walmart’s cyber business.
Already, Walmart is the number two online retailer behind Amazon. But there is a wide rift between the two, with Amazon taking a commanding lead. If WMT is able to take any of that market share away from AMZN, it’ll be big news for WMT stock and its underlying profits. Online sales have higher margins than comparable store ones.
And WMT’s efforts seem to be working. During the third quarter, WMT said that its online sales added about 0.5% to same store sales. That was it was its “biggest contribution yet.” The plan and expectation is that the increased and early deals will only add to that bump further.
The Bottom Line For WMT Stock
In the end, Walmart has recognized that online and ecommerce is a big deal for its traditional retail way of life. And it has to do something. And it’s started to serious play the online game with gusto. By offering plenty of online only and special Cyber Monday deals, WMT stock hopes to leverage its online improvements and beefier web infrastructure.
And it might just succeed in beating Amazon at its own game. Or at least taking away from of that commanding lead. American’s still only have a finite amount of money to spend on gifts this holiday season, getting those dollars out of ours earlier is going to be a key success for Walmart.
If it’s successful, WMT stock should have a very merry fourth quarter indeed.
As of this writing, Aaron Levitt did not hold a position in any of the aforementioned securities.
