Walmart shocked Wall Street on Wednesday when its CFO announced a dour earnings forecast not just for this fiscal year, but the next two.
The disappointing forecast — the result, said CEO Doug McMillon, of multi-billion-dollar investments in e-commerce technology and an hourly worker wage boost to $10 — saw the stock sink 10%. In one morning, the Bentonville, Ark.-based retail giant lost well over $20 billion in market value.
The jury is still out on whether this stock plunge, Walmart’s biggest one-day drop since 1988, is an overreaction on the part of investors. McMillon is selling the news as part of a “three-year growth plan” that’ll see the chain better able to compete online with the likes of Amazon.com AMZN +3.03%
They certainly have plenty of ground to gain. As Forbes contributor Walter Loeb noted, less than 3% of Walmart’s total sales today come from e-commerce. Macy M +2.00%, by way of comparison, makes 8% of its revenues from online shopping.
Still, Walmart’s greatest value proposition has always been its low price guarantee. All the technological bells and whistles in the world won’t endear Walmart to its shoppers if they aren’t making good on that promise online as well as in-store.
Data recently released by retail analytics firm Boomerang Commerce suggests that in one hotly contested category, Walmart is losing ground.
Boomerang analyzed 1,200 consumer electronics items across 490 brands over the same two-day period to see how Walmart, Target TGT -1.33%, Best Buy, and much-hyped new market entrant Jet.com were competing with Amazon on price and assortment.
Walmart was Amazon’s closest competitor in terms of assortment, boasting a 32.9% overlap with Amazon’s consumer electronics products. Best Buy and Jet overlapped by 29.5% and 16.4% respectively.
Where Walmart lost out was pricing. Its ‘most popular’ (or ‘head’, in retail jargon) electronics cost on average 8.3% more than Amazon’s. Jet.com was able to more closely match Amazon on price, with only a 1.4% premium. Jeff Bezos’ online titan discounts its gadgets aggressively, with an average of 66% off list prices, Boomerang found.
Walmart’s discounts averaged 22%, beating Target, which offered 15% off on average in this category.
The big-box behemoth did beat out Amazon on its assortment of products from the top five most popular consumer electronics brands across these e-commerce sites. Walmart and Best Buy had the most items on offer by Sony, Samsung, Fujifilm, Asus and Dell.
As Walmart invests $1.1 billion in e-commerce, its assortment and pricing may well grow more competitive. The company is also making a bet on curbside pickup, allowing shoppers to order their groceries online and collect them from the store parking lot. Right now, not even Amazon can compete with that convenience, at least in the bulk of the country. Its same-day grocery delivery service AmazonFresh is so far available only in a handful of urban markets.