Walmart’s E-commerce Woes Cannot Be Solved by a New Online CEO

Walmart (NYSE: WMT) added a new CEO to oversee its e-commerce operations. The general perception is that this business should be more competitive with Amazon.com (NASDAQ: AMZN). That will be hard to accomplish in the shadow of the battered U.S. sales of the world’s largest retailer.

Neil Ashe was the president of CBS (NYSE: CBS) Interactive before he moved to the job as president and CEO of Walmart’s Global eCommerce business. Walmart obviously has web operations outside America, but without a strong performance of the e-commerce business in its home country, its web division cannot succeed.

The choice of Ashe is a bit odd. He oversaw CBS Sports and News online, along with the tech site company CNET. He also ran the media firm’s overseas sites. The belief that stepping from content to e-commerce is likely to work is hard to explain.

The problem that Walmart has online is not directly related to who runs the e-commerce operations. Walmart’s U.S. store sales have not grown in the past year, and its U.S. revenue has barely increased. This is despite the fact that, after Amazon.com, Walmart’s sites are the second most visited e-commerce sites in America.

Walmart’s U.S. problems have been described as troubled in two ways. The first is that top merchandising executives at the company have done a poor job as they decide what inventory to put into their stores. The other is that Walmart’s price advantages are no longer substantial enough to keep customers from the decision to go to other retailers, like Target (NYSE: TGT). What Walmart cannot do with its bricks-and-mortar stores, it cannot accomplish online. An overall lack of demand cannot be made up by websites. Retailers like Best Buy (NYSE: BBY) and Barnes & Noble (NYSE: BKS) have already proven this.

Walmart’s new online CEO will have his hands tied no matter how skillful and experienced he is. Well over 95% of Walmart’s sales are made in its stores, and in the U.S., the traffic to those stores has slowed. An adroit e-commerce operation, hampered by the same prices and inventories, will not do better than Walmart’s primary business.

Douglas A. McIntyre