Forget Antitrust: Wal Mart Is Punching Back at Amazon

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This post was originally published on Investor's Business Daily.

Forget Antitrust: Wal Mart Is Punching Back at Amazon

E-Commerce: Wasn’t it just months ago that some were lamenting the impending demise of Wal-Mart (WMT) in its battle-to-the-death with Amazon.com (AMZN)? Maybe those obituaries were written a bit too prematurely.

Wal-Mart, the largest retailer in the world, is showing that an elephant can dance. Besieged by Amazon’s online dominance and ability to deliver goods at super-low prices overnight, has responded to the challenge.

XAutoplay: On | OffUnlike other brick-and-mortar retailers like JCPenney (JCP), Sears (SHLD) and other former stalwarts that themselves were never able to respond to Wal-Mart’s challenge 30 years ago, the Bentonville, Ark.-based discounting giant has moved aggressively into e-tailing.

Walmart said its e-commerce business is set to expand by 40% next year as it goes toe-to-toe with Amazon. It will boost its online grocery pickup sites by 100% or more in the coming year, while hiring an army of 2,000 “specialists” to keep on top if its burgeoning website.

Last year, Wal-Mart put up $3 billion for Jet.com, an online retailer whose “smart-cart” checkout technology has helped Wal-Mart boost its e-sales by 60%.

This is only part of the future that Wal-Mart is building. Soon, it hopes to keep families’ pantries stocked, just as Wal-Mart stocks its own shelves, using enhanced pickup and delivery and letting customers use their cellphones to do everything from returning goods to ordering.

Because of the ubiquity of Wal-Mart in so many communities across America, it may have an actual edge on its toughest competitor, Amazon.

In fact, no one should curse or punish Amazon. We should thank it.

As we noted a few months back, the online giant is responsible for something called the “Amazon Effect.” This was described by American Enterprise Institute fellow and economist Mark J. Perry as “the incredibly disruptive effects Amazon is having on the retail industry as it revolutionizes retailing, supply chain management and delivery, with a laserlike focus on creating value for consumers.”

Conventional retailers are growing about 2% to 3% a year, if that; e-commerce is shooting up at 15% or more a year. It’s a retailing paradigm shift brought about by technology.

Yes, there’s lots of pain as old-school retailers fall by the wayside. But there’s also lots of gain, as consumers get new ways to buy and old companies step up to the challenge.

That’s just what Wal-Mart did. And by the way, as an added vote of confidence in its own future, Wal-Mart says it is buying back $20 billion of its own stock. Not the move of a company that thinks it’s endangered.

We all mourn our favorite retailers going the way of the dodo bird. But the new era of e-commerce is on us, and it promises to deliver extreme value, low prices and convenience in ways we’ve never had before. Just as Sears and JCPenney once put rural and small-town retailers out of business, e-commerce today is doing the same.

It’s called creative destruction.

And to think that just a few months ago some were suggesting that Amazon would have to be broken up under antitrust law because it had no viable competitors. Well, Walmart has emerged as that competition. Maybe antitrust will just have to wait.


 

This post was originally published on Investor's Business Daily.