Wal-Mart Notches Web Win Against Rival Amazon

In the hard-fought world of online retail, Wal-Mart has finally notched a win against rival Amazon: For the first time in a decade Wal-Mart's Web sales grew faster than the online retailing giant's.

Global Internet sales at Wal-Mart Stores Inc. rose by 30% to $10 billion during the year ended Jan. 31, surpassing Amazon.com Inc.'s 20% sales growth during the year ended Dec. 31, according to data from trade publication Internet Retailer.

Amazon still dwarfs Wal-Mart's Web sales in scale. Amazon's online sales of $67.8 billion of electronics, media and other products last year are more than six times bigger than Wal-Mart's.

Last year, Amazon sold more than its next 10 biggest competitors combined, including Apple Inc., Wal-Mart and Staples Inc. Amazon declined to comment.

Wal-Mart is intent on catching up with Amazon. To that end, the retailer is buying up e-commerce businesses. On Tuesday it is expected to announce the purchase of Adchemy, a search-engine marketing company that helps retailers optimize their use of search terms. It marks Wal-Mart's 12th e-commerce acquisition in three years.

Wal-Mart has spent heavily to boost its online presence. In the year ended Jan. 31, it plowed roughly $500 million into e-commerce investments, including opening three new online fulfillment centers in Texas, Pennsylvania and Brazil and hiring 1,000 employees in Silicon Valley.

In the U.S., it is currently testing same-day delivery and online grocery ordering in various markets, as well as expanding online offerings such as car insurance.

With Adchemy, Wal-Mart plans to take on about 60 employees, though not its founder Murthy Nukala. "We get to go faster as a result of them being part of our team," said Neil Ashe, chief executive of Wal-Mart's global e-commerce division, in an interview.

Mr. Nukala said the acquisition would help Wal-Mart boost its e-commerce business but that he didn't want to come along because after "a number of years in the entrepreneur saddle, I just needed time to recover and recuperate."

In January, Mr. Ashe predicted the world's largest retailer would be able to match Amazon's range of products and quick shipping times within two years. In February, Wal-Mart told investors it planned to spend an additional $150 million on e-commerce investments and reach $13 billion in online sales this year, another 30% increase.

Online sales were around 2% of Wal-Mart's nearly half a trillion dollars in revenue last year.

Its e-commerce operation represents its fastest-growing business and helped Wal-Mart increase total sales last year in what was an otherwise weak year.

Wal-Mart has had its eye on Adchemy for several years, and decided a month ago to pursue the deal, Mr. Ashe said, declining to disclose the terms of the transaction.

Adchemy, which attracted nearly $120 million from investors like Microsoft Corp., Accenture LLP and August Capital since 2004, failed to turn a profit last year.

The company has worked with retailers like Macy's and the Finish Line to boost sales by using the right search terms on Google and Amazon to help shoppers find what they are looking for faster. For instance, if shoppers type "cheap headphones," the retailer would be able to display headphones in the $5 to $10 range, rather than just matching the word "cheap."

The Bentonville, Ark., company is also intent on using Adchemy's technology to beef up its own search page to compete with Amazon and Google which are locked in the fight to be the first search box shoppers go to when looking for products online.

Customers that come directly to its website to search for products are more likely to buy the items, compared with shoppers that reach walmart.com through another search engine, Mr. Ashe said.

Meanwhile, the retailer is leaning on e-commerce in expansion to countries where it doesn't currently have stores. Wal-Mart's focus is on e-commerce markets in the U.S., U.K., Brazil and China, but Mr. Ashe wants customers anywhere to have access.

"I fully expect us to be serving countries through just e-commerce in the future," Mr. Ashe said.

Write to Shelly Banjo at [e-mail]

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