Walmart.com CEO says sales grow despite downturn

NEW YORK Thu Nov 13, 2008 6:04pm EST

NEW YORK (Reuters) - Just as Wal-Mart's (WMT.N) stores are benefiting from an economic downturn that has shoppers gravitating toward low prices, so too is its online division, the head of Walmart.com said on Thursday.

"Our traffic is growing, our conversion is increasing," said Raul Vazquez in an interview with Reuters.

"As the economy has become more challenging, people migrate to value. At Walmart.com, we stand for low prices the same way the stores do. And we think we're seeing that in the results -- people are migrating to our website as well."

Earlier on Thursday, Wal-Mart Stores Inc reported a slightly better-than-expected 10 percent rise in quarterly profit.

Wal-Mart does not break out results for its online division, but Vazquez said growth is above expectations.

"Historically, we've grown at two to three times the industry's growth rate," he said. "ComScore reported about 6 percent growth for Q3 and we definitely exceeded even our own expectations of that two to three times growth rate."

ComScore Inc (SCOR.O) said in October that, according to its retail e-commerce report, online spending rose 6 percent in the third quarter.

Amid the tough climate, Vazquez said Walmart.com has looked for ways to cut costs for shoppers. It is now offering 97 cent shipping on more than 60,000 items and it has cut the shipping rate an average of 20 percent on thousands of additional products.

Walmart.com is also expanding its "Site to Store" program, which allows customer to order merchandise on its website and have it shipped to a Wal-Mart store for free pickup.

It has introduced "Site to Store Express," which allows customers who pay $29 a year to ship orders to a Wal-Mart store in three to five business days. Shipping time for a typical "Site to Store" order is seven to 10 business days.

To attract holiday shoppers, Walmart.com will offer deals on its site on Thanksgiving and every day during the week after Thanksgiving.

"That's one of our highest traffic days of the year," Vazquez said of Thanksgiving.

VALUE BUNDLES

Consumer have pulled back on purchases of big-ticket items amid the deteriorating economic climate and credit crunch. That has hurt sales of consumer electronics and Circuit City Stores Inc CCTYQ.PK filed for bankruptcy protection this week, while Best Buy Co Inc (BBY.N) slashed its profit forecast.

But Vazquez said Walmart.com is still seeing "quite a bit of growth" in consumer electronics sales.

"This is a difficult time in electronics, but I've been pleased with the growth that we're seeing going into holiday in areas like TVs," he said.

Shoppers are migrating toward purchasing "value bundles," where Walmart.com bundles popular products together, such as a flat-screen TV with a DVD player, and sells them for less than it would cost to buy each separately.

Vazquez also said customers are showing an interest in Blu- ray high-definition DVD players, which Hollywood is hoping will help to jump-start slower sales of DVDs.

"The interesting thing with Blu-ray, as with any technology, ... is at what point does it get to a price point where it can really go mass?" he said. "Is it going to be this holiday? Will it be maybe in some of the day after Thanksgiving sales? Or is that going to be next year? I'm not sure."

Currently, Walmart.com is selling a Samsung Blu-ray player for $247.54 and a Magnavox Blu-ray disc player for $198.

Separately, Vazquez said "not at this time," when asked if Walmart.com is looking to expand into online grocery sales.

In September, Walmart.com began allowing visitors to browse the grocery items that discount retailer sells in its stores. Browsers can then check to see if the products are in stock at a store near them.

(Editing by Andre Grenon)