Wal-Mart will spend nearly $2 billion in web improvements over two years
October 14, 2015 05:00 PM
Could spending a fortune in improvements result in greater online sales gains? Wal-Mart Stores Inc. is betting on it.
Wal-Mart, No. 3 in the 2015 Internet Retailer Top 500 Guide, will spend nearly $2 billion on e-commerce technology and infrastructure improvements over the next two years.
CEO Doug McMillon told Wal-Mart’s annual investor’s day meeting that the company will spend $900 million in improvements to Walmart.com and its global e-commerce business in 2016 and $1.1 billion in 2017. Over the past three years Wal-Mart has invested $2.7 billion in improvements to its e-commerce business including $700 million in 2015.
Wal-Mart generated Internet Retailer-estimated global web sales of $12.13 billion in 2014, up 21% over $10.03 billion in 2013. “Our investments in our people, our stores and our digital capabilities and e-commerce business are the right ones,” McMillon told analysts.
In addition to spending more on e-commerce, Wal-Mart also plans on spending $11.5 billion on store improvements in 2016 and $9.9 billion in 2017. “The investments outlined today are part of a framework designed to drive sales growth by strengthening the U.S. and e-commerce businesses,” McMillon said. “This framework is intended to enhance the experience in stores, leverage Walmart’s unique supply chain capabilities to lower costs and build deep digital relationships with customers.”
Recently Wal-Mart has been expanding its e-commerce infrastructure and expanding services. In the past year Wal-Mart has opened three e-commerce distribution centers including a 1.2-million-square-foot fulfillment center in Union City, Ga., 17 miles southwest of Atlanta earlier this month. The new facility will eventually employ 400 full-time workers. In July, Wal-Mart opened a 1.2 million-square-foot facility in Bethlehem, Pa., and a similar facility in Plainfield, Ind.
In September Wal-Mart expanded its pickup service for online grocery orders to stores in Atlanta, Salt Lake City and six other U.S. cities. Customers will be able to order items online, select a time to pick them up, and an employee will deliver the food to their car when they arrive. Wal-Mart previously offered the service in five other markets as a test that began in 2011.
“As we grow stronger with technology and innovation, we will compete against the best digital players,” McMillon said.