WMT Walmart Inc

By Brian Baskin 

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Wal-Mart Stores Inc. is making progress in expanding its e-commerce sales, but at a steep price. The retailer reported a 21% jump in online sales in the third quarter, but slimmer profits, reflecting the cost of building out the e-commerce business while also sprucing up stores, the WSJ's Sarah Nassauer and Joshua Jamerson report. Wal-Mart's enormous size hasn't immunized it from the pressures of rising fulfillment costs facing retailers. But analysts say Wal-Mart's scale could prove valuable during the busy pre-Christmas shopping season when it could win new customers looking to pick up online orders at one of the company's thousands of stores - one of the few advantages brick-and-mortar retailers have over their online competitors. Whether that will be enough to turn the tide against Amazon.com Inc., which continues to eat away at traditional retailers' sales and profits, is another story.

Amazon's investment in logistics in India is paying off. The company has grabbed nearly a third of the South Asian nation's tiny but rapidly growing e-commerce market just two years after Chief Executive Jeff Bezos committed to spending billions of dollars in the country. Amazon used some tried-and-true tactics, the WSJ's Newley Purnell reporters, including building state-of-the-art warehouses. But the online retail giant is trying some new methods tailored to India's patchy logistics and financial infrastructures, including a greater reliance on motorcycle delivery men and allowing customers to pay in cash. Amazon's early success indicates the company has learned from its failure to gain a foothold in China, where the retailer built capacity at a slower pace, allowing homegrown rivals to overtake it. Should Amazon's success in India prove sustainable, expansion into other emerging markets may be next.

Some of Amazon's competitors are mimicking one of the company's most successful tactics on its home turf. Crate & Barrel is allowing outside partners to sell goods on the home-goods chain's website, blurring the line between retailer and marketplace and following in the footsteps of more than 250 companies, including Wal-Mart and Macy's Inc., the WSJ's Laura Stevens writes. It's a strategy designed to give consumers more choices without having to take on additional inventory. However, retailers also take on the risk that a third party's goods are sub-standard, which can harm their brands. Amazon faces the same problem; earlier this week sued companies allegedly selling counterfeit goods on its marketplace.

INVESTING

A second Chinese logistics company is testing the waters for a U.S. initial public offering, despite tepid demand for the last stock sale from the sector. ZTO Express Inc. debuted on the New York Stock Exchange last month, and its shares have fallen about 20% since then. Now, Best Logistics Technologies Ltd., which like ZTO supports China's booming e-commerce sector, plans to give it a go next year. Investors may have pent-up demand for logistics stocks after more than five years without an IPO in the sector. But China's fragmented parcel-delivery market is cutthroat, and slowing economic growth and rising global trade protectionism could make the headwinds even stronger. Best Logistics may be hoping its niche in managing warehouses will prove more appealing to investors, or that its backers - Alibaba Group Holding Ltd. and Foxconn - will be enough of a draw.

QUOTABLE

IN OTHER NEWS

U.S. consumer prices rose in October for a third straight month. (WSJ)

U.S. housing starts rose 25.5% in October. (WSJ)

Best Buy Co.'s online sales grew 24% for the third straight quarter. (WSJ)

Volkswagen AG will undertake a sweeping restructuring of its embattled passenger-car brand, including up to 30,000 job cuts over five years. (WSJ)

Amtrak posted its smallest operating loss in decades in the passenger railroad's just-completed fiscal year. (WSJ)

Bulk carrier DryShips Inc. will raise $20 million through a convertible preferred share offering to help pay down debt. (WSJ)

DHL Express will spend $185 million in the U.S. to boost its e-commerce capacity. (DC Velocity)

Amazon is allowing Prime-eligible merchants to ship items from their own facilities to free up space at company-owned warehouses. (Bloomberg)

Argentina is stepping up security at its main grain-exporting port of Rosario to combat drug trafficking. (Reuters)

The two largest makers of beer kegs are forming an alliance to improve trans-Atlantic shipping of the beverage. (Global Trade)

BNSF and Kansas City Southern will launch an intermodal service from Chicago to southern Mexico. (Transport Topics)

United Parcel Service Inc. will add flights between Southern California and its hub in Louisville during the peak holiday shipping season. (Air Cargo Eye)

The ports subsidiary of shipping company Nippon Yusen K.K. took a 20% stake in Maher Terminals, the largest container terminal at the Port of New York and Jersey. (Port Technology)

BNSF Railway will study the use of physical covers for coal and petroleum coke trains under a tentative settlement of a lawsuit by environmental groups. (Seattle Times)

Target Corp. will fulfill online orders from more than 1,000 of its stores this holiday season. (Internet Retailer)

The Association of American Railroads asked the Surface Transportation Board to stop rulemaking until Donald Trump appoints new board members. (Progressive Railroading)

Chinese shipyards built 7.6% less capacity by tonnage in the first 10 months of the year. (Seatrade Maritime)

ABOUT US

Brian Baskin is editor of WSJ Logistics Report. Follow him at @brianjbaskin, and follow the entire WSJ Logistics Report team: @PaulPage, @lorettachao and @EEPhillips_WSJ, and follow the WSJ Logistics Report on Twitter at @WSJLogistics.

Subscribe to this email newsletter by clicking here: http://on.wsj.com/Logisticsnewsletter .

Write to Brian Baskin at brian.baskin@wsj.com

(END) Dow Jones Newswires

November 18, 2016 06:40 ET (11:40 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.