Can Wal-Mart Take On Amazon?

The company has based its business model on attracting customers by undercutting traditional grocers, but more shoppers are opting for smaller stores with more pleasant experiences over deeply discounted products.

However, the wholesale giant claims it has another trick up its sleeve – a new and improved online shopping platform that will eventually rival that of e-commerce king Amazon.com, Inc. AMZN.

A More Established Business

Wal-Mart dwarfs Amazon in size; the company's revenue is more than 5 times that of Amazon's. While Amazon's online sales dramatically outpace Wal-mart's online sales, the company has seen a 30 percent increase in online sales growth compared to Amazon's 20 percent rise.

Related Link: Wal-Mart Misses Q1 Estimates, Shares Fall

Infrastructure

Wal-Mart's push to make a name for itself in the online marketplace means the company will have to set up distribution warehouses around the country in order to fulfill orders. However, the store's current brick-and-mortar model means the retailer has already invested in distribution centers throughout the U.S.

While Wal-Mart will still have to revamp those centers to make them compatible with e-commerce, the initial investment will be much smaller than if the company had to start from scratch.

Membership

Wal-Mart said it is planning to test a new free shipping service where members pay a $50 annual fee and get free shipping privileges for all orders made on Wal-Mart's website. If the pilot program is successful, it could put a dent in Amazon's Prime user base, as that service comes with a $99 membership fee.