Wal-Mart, Amazon battling for online customers Increasing competition in the e-commerce space has put pressure on Wal-Mart, which is losing customers to online discount retailers.

Wal-Mart's customer base has only recently embraced online shopping, but they are quickly making up for lost time, Bloomberg reports. The world's largest discount retailer is rapidly losing customers to the leader in the online space, Amazon, which has aggressively courted such consumers as it works to defy analysts' expectations amid a period of tepid consumer spending.

The rapid shift in consumers' spending habits has caught Wal-Mart off guard, according to experts. As few as five years ago, only 25 percent of the Arkansas-based company's customer base shopped at Amazon. However, that figure has jumped to more than 50 percent, according to data from research firm Kantar Retail. The shift away from shopping at brick-and-mortar stores and toward purchasing items online is indicative of an overarching theme within the industry, retail analysts say.

Online purchases have continued to jump over the past few years, particularly in the wake of the recession. Americans are increasingly scrutinizing their spending, and they spent more online over the past holiday shopping season than in any other in history. Amazon has courted such consumers for years, and its efforts appear to be paying off, as more and more defect to the Seattle-based online giant.

According to Kantar analyst Bryan Gildenberg, there are a few factors pushing consumers toward Amazon. He said that Wal-Mart's prototypical customer – one who makes less than $50,000 per year – is becoming increasingly tech savvy. What's more, he contended that consumers who embraced Wal-Mart during and in the wake of the financial and housing crises are rediscovering Amazon.

For its part, Amazon has worked tirelessly over the past decade to continually expand its vast system of distribution and packaging warehouses. The company has employed business cost reduction campaigns in an effort to offset its aggressive spending, but investors have – at least thus far – largely withheld criticism. Amazon chief executive Jeff Bezos has sought to ensure future growth through the company's line of Kindle e-readers, and with its new tablet, the Fire.

"Amazon has moved from being this unusual niche competitor for Wal-Mart to a force that can reinvent the industry," Gildenberg said. "Young people are tech savvy and they’re unemployed, too. The affluent shopper is trading back out of Wal-Mart and Amazon is a bigger part of their life than before."

During its last fiscal year, online sales accounted for only 2 percent of Wal-Mart's total revenue. While Wal-Mart's revenue grew 8 percent in its 2011 fiscal year, Amazon's jumped 41 percent, as the online retailer ratcheted up its efforts to woo new customers and glean additional revenue from existing ones through discounted shipping and other promotional items.

Executives at Wal-Mart, however, are not willing to wave a white flag in the mounting online battle. The company has spent more than $300 million over the past 10 months in an effort to bolster its online store through mergers and acquisitions, as well as through procuring top talent in the field. Like Amazon, Wal-Mart excels in supply chain management and strategic sourcing, and the company is also working to use its physical stores to outmaneuver Amazon.

While consumers inevitably have to wait – even if it is only 12 hours – to receive a package from Amazon, they will soon be able to order nearly any item through Wal-Mart's e-commerce platform and have same-day pickup at a local store. Experts contend Wal-Mart will continue to exploit that advantage over Amazon, especially as it works to reclaim customers that have embraced Amazon's online store.

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