Wal-Mart's New Cyberstore Sparks Industry Debate

After a brief transitional period, Wal-Mart last week returned with a vengeance to Internet computer- products retailing, offering 20,000 products at pricing that had rivals on and off the Internet fuming. According to the Computer Retail Week Online (CRWi) report at http://techweb.cmp.com/crw/news/wal0314.html by Computer Retail Week Executive Editor Mark Harrington, a Wal-Mart Online staffer confirmed the company is "trying to target a wider customer base than just people coming in the store," with its new product offerings, which include everything from a $10,000 UNIX software package to a $179 Zip drive.

Predictably, rivals were taken by surprise. "This is not your grandma's Wal-Mart," said Guio Barela, Chief Executive Officer of ICXpress, which boasts 75,000 SKUs on its Web site, with the proper authorizations. "If they're aiming at Main Street, America has gotten pretty sophisticated."

Retailers, who asked not to be named, said they saw numerous violations of minimum advertised pricing programs and had something to say about the apparent violation of authorized vendor agreements if, indeed, Wal-Mart is authorized. It wasn't clear, however, if Internet pricing would constitute a violation of MAP standards (minimum advertised pricing).

Last week, Harrington spoke by phone with Phil Martz, director of Wal-Mart Online, to discuss the company's intentions and ambitions. "The reason we've become so aggressive on the computer products is because, right now, electronic commerce is not proven, and someone's got to get aggressive people to try it," the Q&A quotes Martz. The transcript of that conversation can be found at http://techweb.cmp.com/crw/news/wal0319.html.

Wal-Mart is incorporating many of the same policies that govern computer- product sales in its stores to its Internet sales efforts, including a 15- day limit on returns. Consumers are offered a range of shipping options, from two-day to six-day mail, at varying fees.

A Wal-Mart receptionist told CRWi the effort began the first week of March, following a blackout period during which Wal-Mart ended its previous online computer efforts using its former vendor, Microsoft. She said business has picked up dramatically since the new site began and noted that Wal-Mart could arrange volume purchases with vendors on a per-order basis, and added it was able to arrange reseller supply programs. She said Wal-Mart advertises the site only in its weekly flyer, and users who register are sent frequent bulletins listing specials. She said additional advertising, perhaps to business clients, is anticipated.

Computer Retail Week reports that customers who register for the site automatically receive an e-mail advertising the day's specials. Some of the products featured on the Wal-Mart site include:

  -- Three IBM Aptivas including a Pentium 166 described on the page as
     "new."   Notably, IBM restricts online sales in its retailer contracts.
  -- A Compaq ProLiant 1500 server for $10,678.38 is featured in a section
     titled Pentium Minitowers, but no Presario consumer systems.   A Compaq
     spokesman, who had not heard about the site, expressed surprise on
     hearing it offered a range of Compaq products, from DeskPros to
     ProLineas, at aggressive pricing, including a Compaq DeskPro 2000
     Pentium 100 at $977.

  -- An NEC Versa 2400 notebook for $1,464; a U.S. Robotics 56K internal
     modem for $198 (and an external model for $188) and Iomega's Zip drive
     for $179.

  -- An AST model 9406 Advantage selling for $2,509.89. A retailer who
     carries AST Computer products said he was surprised to see this when
     its MAP is $2,599.

Computer Retail Week is the leading newspaper for technology retailers. It provides critical information about new alliances, technologies and products for a wide audience of computer hardware and software retailers, mass merchants, software specialty stores and other Channel members. For the past six years, Computer Retail Week has delivered breaking news weekly throughout the year. Breaking news stories can be viewed by visiting Computer Retail Week's home page -- CRWi -- at http://www.crw.com/.

CMP Media Inc. provides publishing, marketing and information services to the entire high-technology spectrum -- the builders, sellers and users of technology -- through print and electronic media. All of CMP's publications and online products can be accessed through the company's TechWeb® site on the World Wide Web (http://www.techweb.com/). Along with Computer Retail Week, print titles include EE Times, Computer Reseller News, InformationWeek, NetGuide Magazine and WINDOWS Magazine.

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SOURCE: CMP Media

CONTACT: Leslie Dunbar of CMP Media, 516-562-7040, or ldunbar@mp.com