Under Tech

Cramer: How Wal-Mart is giving Amazon a run for its money


Cramer: How Wal-Mart is giving Amazon a run for its money
Want create site? Find Free WordPress Themes and plugins.

For so long, it seemed like no company could rival e-commerce colossus Amazon, but Jim Cramer thinks one up-and-coming online competitor could give it a run for its money: Wal-Mart.

“You might think this comparison sounds crazy, even after the excellent quarter Wal-Mart just reported [on Thursday], but when you take a step back, it’s pretty clear that these two companies have a lot more in common than you might expect,” the “Mad Money” host said.

Before the rise of Amazon, Wal-Mart’s scale and massive array of merchandise shuttered countless smaller stores because they could not compete. “Wal-Mart was the great destroyer of retail, the great disruptor, laying waste to mom and pop stores all over the country by offering more products and undercutting them on price,” Cramer explained.

Watch the full segment here:

Amazon employs a similar strategy, using its scale to sell items online at their lowest available prices. Most retailers cannot compete, but Wal-Mart’s breadth and ability to negotiate with its suppliers enable it to keep pace with Amazon’s prices.

Wal-Mart CEO Doug McMillon also set a goal for the company to become a major player in online retail, gaining approval from the Walton family, which owns just over half of the business. With a good balance sheet, the company can afford to spend the money to challenge Amazon, but Cramer said the family’s approval was key for moving the process forward.

“As long as he’s got the backing of the family, he can afford to take some short-term hits in order to grow the company’s e-commerce presence. That’s a real rarity in this game,” Cramer said. “At most publicly traded companies, the shareholders tend to rebel when management starts promising near-term pain. And you better believe that declaring war on Amazon is painful.”

While Wal-Mart may not unseat Amazon as the top dog in e-commerce, the “Mad Money” host does believe it could become a serious competitor, with its online sales business up 63 percent in the latest quarter. On Wal-Mart’s earnings conference call, the company touted its offering of 50 million products, up from 35 million last quarter and 10 million just one year ago.

Wal-Mart’s come-up in the online space started when the retailer announced plans to restructure in early 2015. The first step was closing 269 underperforming stores. Then, later in the year, McMillon announced a big boost in e-commerce spending – $900 milion in 2015 and $1.1 billion for the following year.

In response, the stock got pummeled, dropping from the mid-$80s to the mid-$50s, but with the backing of the Walton family, McMillon had permission to continue his agenda. In the summer of 2016, Wal-Mart acquired one of the world’s fastest growing online retailers, Jet.com, for $3.3 billion.

Prev1 of 2

Did you find apk for android? You can find new Free Android Games and apps.
Click to comment

The Latest

The Latest Post

Last Post

More Posts

The Latest

COPYRIGHT © 2016 TECH NEWS. POWERED BY TRENDMEDIA-ID

To Top