clock menu more-arrow no yes

Amazon Makes Holiday Shopping Season Tough for Target and Walmart

The gap was wide in the third quarter. Given Amazon's strengths, the fourth quarter could be even worse.

Vitaly Titov & Maria Sidelnikova / Shutterstock

Neither Target nor Walmart needed a reminder about the distance between their online businesses and Amazon’s. Their third-quarter sales numbers provided it anyway.

Walmart’s online sales grew just 10 percent in the third quarter, slower than the 15 percent industry average, while Target’s grew 20 percent, well below the company’s stated goal of 30 percent, the companies announced last week. These numbers might not spell all-out trouble if it weren’t for Amazon’s performance during the same period: The company’s electronics and general merchandise business — basically the core of its retail operation — grew 35 percent in North America in the quarter, marking the segment’s highest growth rate in several years.

The third-quarter headwinds of the traditional retailers coupled with Amazon’s momentum makes this e-commerce holiday season an even more critical one for Walmart and Target. It doesn’t help that Amazon’s huge logistics investments over the last few years mean it can flex its muscles the most during the holiday with its arsenal of express shipping capabilities when customers are often looking for last-minute gifts.

Amazon now offers free same-day shipping to Prime members in more than a dozen U.S. cities and free two-hour delivery through the Prime Now app on a smaller catalogue of goods in 20 large and mid-size cities. Amazon is also starting to offer special same-day delivery for the most in-demand goods, such as its recent promotion to get the latest Call of Duty game into customers’ hands as soon as it is released. Promotions like these will likely continue into the holidays.

Walmart and Target continue to counter by using their stores to their advantage by transforming them into mini shipping hubs to help cut down on delivery times and into pickup locations for last-minute online orders. Target also offers same-day delivery in a couple of cities and has expanded its curbside pickup initiative to more than 100 stores in Chicago, Philadelphia, the Bay Area, Los Angeles and the New York metro area.

If they’re going to close the gap, now has to be the time. But history isn’t on their side.

This article originally appeared on Recode.net.

Sign up for the newsletter Sign up for The Weeds

Get our essential policy newsletter delivered Fridays.