Wal-Mart Stores Inc announced that it would take a different strategy to online expansion than Amazon.com by utilizing its large network of stores for distribution.

OTC Stocks Exchange reported that the world's largest bricks and mortar retailers is serious on rivalling more directly with Amazon, as it has recommended by studying a free shipping club, then it may have to invest well beyond a previous announcement investment target on large distribution centers and other costs for its plan.

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According to Business News, Wal-Mart's quarterly results were disclosed on Tuesday where it stressed the value of increasing its online market. Online profits have risen 17 percent internationally in the first four months ended April 30, versus a slight drop on entire sales. On the other hand, investments in e-commerce shaved-down 2 cents off the retailer's profits per share, equal to the cost effect in the quarter of its move to increase wages for entry level employees all over the United States.

Most analysts see the advantage aggressively in online industry; however, as Wal-Mart gets ready to examine a free shipping plan, targeted at cost-cutting Amazon on price, the future of rivalling with a competitor that heavily spends on investments has increased some issues.

Wal-Mart has stated it would put in $1.2 billion to $1.5 billion on e-commerce in 2015. Furthermore, there are also plans to open four large fulfilment centers, already adding to 11 facilities in operation, and the 12 conventional distribution refitted centers to help in the e-commerce.

Changing traditional distribution centers to manage e-commerce may possibly costs at around $20million to $40 million dollars each, while establishing a large-scale facility from scratch costs $150 million, according to the director of Kurt Salmon, who specializes in supply chain, Steven Osburn.

Another concern is shipping costs, Sucharita Mulpuru, a Forrester Research analyst, forecasts that Amazon could lose $2 billion per year on shipping to Prime program members, which provides free shipping on most items for $99 yearly fee. 

TagsWal-Mart, Wal-Mart Stores, Wal-Mart news, Wal-Mart Business, Wal-Mart Competitors, Amazon.com, Wal-Mart vs Amazon