At Wal-Mart, moving the needle on e-commerce

At Wal-Mart, moving the needle on e-commerce

By Jessi Hempel, writer January 7, 2014: 1:57 PM ET

The retailer’s global e-commerce chief, Neil Ashe, sits down with Fortune‘s Adam Lashinsky in Las Vegas to talk struggles and strategy.

FORTUNE — Amazon (AMZN) is the undisputed master of online retail. Wal-Mart (WMT) is a superstore juggernaut. For years, the two companies existed in relative isolation, an either/or proposition for shoppers.Not for long. Increasingly, customers won’t choose between buying online or offline — they ‘ll want a retail experience that fuses the two seamlessly, according to Wal-Mart’s Neil Ashe. Which is what the mega-retailer aspires to offer. “If we demonstrate our organizational structure to them, we’ve lost,” Ashe says.

As president and CEO of global e-commerce, Ashe is charged with leading Wal-Mart into a more digital future — and sprinkling a bit of Silicon Valley pixie dust onto the world’s largest retailer. On Jan. 6, he joined Fortune senior editor-at-large Adam Lashinsky at an intimate gathering of senior marketing and technology executives in Las Vegas to discuss the company’s strategy.

Wal-Mart is big. Full stop.

The company pulled in $466 billion in revenue last year, earning it the top spot on the Fortune 500. It has long been a technology leader, managing logistics expertly to supply and staff its 11,000 stores around the world. But the retailer has been late to the e-commerce game. Ashe, who joined Wal-Mart in 2012 from CBS Interactive, has been tasked with making e-commerce central to the company.

That will be more critical in 2014 as consumers pay less attention to the difference between buying something online and buying it off. Already, they are shopping at home, in stores, on the subway, at the office. They are comparing prices and checking out details on their smartphones, picking up online purchases on the way home from work, having their groceries delivered. And they have come to expect retailers to be nimble enough to meet them anywhere.

Amazon gets this. It added grocery sales and video rentals to its website. It created its Prime service, priced at $79 per year with free two-day shipping. And it continues to build physical locations — warehouses and pick-up locations — across the U.S.

Wal-Mart gets this, too. Wal-Mart has largely watched Amazon clean up on web retail over the past decade while it largely ignored the centrality of the Internet to the shopping experience. Ashe believes that shoppers’ shifting expectations will work to the company’s advantage. “This is about how we take the assets we have and make them contemporary,” he says.

What does that look like? Ashe described Wal-Mart’s Black Friday one-hour guarantees, a program introduced in 2012 and expanded in 2013. In a classic bait and switch, retailers have long promised customers who gather in line on Black Friday certain sales; however, they run out of stock quickly (“You know, then, they only have three items,” Ashe says) and the customers are left unhappily nosing around the store. With Wal-Mart’s guarantees, customers who stood in line for the entirety of a designated offer got the deal, period. If the item wasn’t in stock, they were promised delivery before Christmas. On Black Friday 2013, Wal-Mart sold more than a million 32-inch televisions in an hour.

Ashe has also been on a purchasing spree since he got to Wal-Mart, buying several tech startups (including Torbit, OneOps, Tasty Labs, and ShopyCat) that have experimented with social gifting, subscription boxes, and other trends that have popped up in online shopping in recent years. Very little of this new technology has moved the needle for Wal-Mart so far, Ashe concedes. Then again, the needle is fairly substantial at Wal-Mart.

Wal-Mart is learning from its acquisitions, Ashe says. Which is the point. “We strive to fail,” he says, explaining that failure is one way to prove that the company is taking new risks. It’s the Silicon Valley Way. With $13 billion in revenue from Walmart.com expected in 2014 — a number that is growing at a fast clip — it’s starting to be the Bentonville Way, too.