) is stumbling to get its online business going. We estimate that
Wal-Mart's intrinsic value is around $250 billion
($73/ share) while
Amazon is worth close to $110 billion
, yet Wal-Mart's online sales in 2010 brought in less than $10
billion vs. around $34 billion for Amazon. Compete.com also
indicates that Amazon draws close to 80 million unique visitors a
month compared to Wal-Mart's 46 million. So when it comes to online
retailing, Amazon and others are running laps around Wal-Mart.
Other competitors like Target (
), Costco (
) and Amazon (
) are looking to level the playing field by beefing up their online
presence, which could add up over time as more spending shifts
online and put a dent in our valuation that implies 40% upside for
Wal-Mart's Progress Hasn't Been Impressive so
Walmart.com stumbled early on from a poor user experience and
offers limited personalization and recommendations, which companies
like Netflix and Amazon use to drive sales and higher engagement.
Its product offerings are not as broad as other online retailers.
For instance, in digital camcorders, Amazon offers over 2,000
varieties whereas Walmart.com's offers 96, according to a report
from Wells Fargo Securities. The same is true for most electronics
when compared to either Amazon or Best Buy.
In an attempt to turn this around, Wal-Mart last year created a
business unit called Global.com, which is designed to drive growth
internationally. The goal is to create a single online platform
where users can buy from any market similar to Amazon's platform.
This will undoubtedly be more logistically complicated for Wal-Mart
that has operations spanning the globe. Moreover, the company is
increasingly dependent on its international business, an item we
discussed in a recent note titled
Wal-Mart Rides to $73 on International Growth.
There is tremendous value to unlock if Wal-Mart can build a
platform to connect its dispersed users from various markets. While
we believe that recent efforts are moving in the right direction,
it looks like it will take some time for online sales to really
move the needle for the retail giant.
See our complete analysis for Wal-Mart