Walmart is losing in a crucial category that will determine its future

Wal-Mart

Walmart is losing in a category that may ultimately determine the company’s future and overall profitability in an age of growing e-commerce.

While Target has managed to post huge increases in its e-commerce business, Walmart has been sluggish in the same category and has actually been witnessing some troubling declines in sales.

In the most recent quarter, the company reported growth of 8%. That’s down from 22% in last year’s fourth quarter and 30% compared to two years prior.

Target in the meantime grew its e-commerce business by 34% last quarter and that growth has been fairly consistent with at least 20% growth in each quarter of the last year.

The e-commerce troubles at Walmart are compounded by the fact that it recently announced plans to spend just $900 million in web development and $1.1 billion to expand its online grocery and online assortment.

Target in comparison plans to spend $1.8 billion on e-commerce expansion in 2016 and $2.5 billion next year as it expands its supply chain and technology.

Walmart’s failures in the e-commerce space are not for lack of trying. The company launched its Shipping Pass service in select test markets last year. That program offers free three-day shipping for $50 per year.

Walmart charges non-Shipping Pass members for shipping on orders over $50, while Target offers free shipping on orders over $25.

“We’re improving our stores, adding critical capabilities and deepening our digital relationships with customers as we work to become the first to deliver a seamless shopping experience at scale,” CEO Doug McMillon said in the company’s most recent earnings call in February.