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.

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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.

Written by Tammy Johnson

Tammy Johnson

Tammy Johnson is the Retail Editor at BusinessPundit. She focuses on Fortune 500 retail company's and disruptive brick-and-mortar and e-commerce companies that are changing the retail landscape. She can be reached at TammyJohnson@BusinessPundit.com or (929) 265-0240