Major retailers, Target Corp. (NYSE:TGTB) and Wal-Mart Stores Inc. (NYSE:WMTB) are determined to take on e-commerce giant Amazon.com Inc. (NASDAQ:AMZNC) this holiday season for a share of what is expected to be an almost $95 billion buying binge.
According to research firm, eMarketer, this would put online shopping’s share of total holiday buying over the 10% mark for the first time ever.
Target Is All In
The success and growth of online shopping has caused traditional retailers like Target to reassess their holiday battle plans. This year, for example, Target will use 1,000 of its 1,800 stores to help fill online orders. That’s more than double the number of stores Target used last year.
Overall Target has struggled to design an e-commerce strategy. In September the company eliminated the role of chief digital officer just four months after the position was created. Currently, according to Target CEO Brian Cornell, the company has been stress-testing its Web systems after technical issues that slowed the site down last year. Said Cornell, “This year we have devoted both capital and expense to improve the digital experience, increase reliability and create additional capacity.”
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In-Store Pickup Expected To Lead To Growth
One strategy Target plans to employ that isn’t widely available to Amazon (at least not yet) is in-store pickup. This saves Target on delivery costs. Target chief operating officer John Mulligan said the company expects volume to grow 50% from a year ago, thanks in part to renewed focus on the in-store pickup strategy.
Target recognizes the value of an online presence thanks to the fact last year more shoppers went online than went to stores over the high-traffic Thanksgiving weekend. The potential is simply too great to ignore.
More Available Products Means More Sales
One big advantage to having an online presence is that retailers can offer more products than can possibly be stocked in a single store. Wal-Mart chief finance officer, Brett Biggs told investors recently that the company now has more than 20 million product listings on Walmart.com, up from 8 million earlier this year.
The net result, Biggs said, is an expectation that e-commerce sales would jump 20 to 30% in the second half of this year with much of that coming during the holiday sales period. Wal-Mart’s purchase of Jet.com in September for $3.3 billion emphasizes the company’s commitment to online sales.
The Giant Is Not Sleeping
Meanwhile, Amazon has no plans to sit around and wait for its bricks and mortar competition to catch up. The company will offer its wildly popular Prime service which provides free 2-day shipping along with an expansive library of free streaming video and music and much more for $79 for one day only this coming Friday, Nov. 18. Prime normally costs $99 for a year.
Amazon forecast in October that holiday sales might miss estimates although operating income should at least break even. The problem for Amazon is, as always that it put so much revenue into expansion and new areas including warehouse expansion, grocery delivery and video production.