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What Does Wal-Mart's Marketplace Say About Online Shopping?

Despite all its success, Wal-Mart Storeshas yet to conquer the online retail world. With its launch of the Wal-Mart Marketplace, the world's largest retailer may be hoping to change that.

AP

Last week, Wal-Mart's online strategy took a dramatic turn when it announced it would open up its Web site to outside vendors. Those retailers, who are far lesser known than the retailing giant, will fulfill the orders themselves, shipping from their sites, handling exchanges and returns.

This model borrows a page from Amazon.com . Sure, Wal-Mart is not the first traditional retailer to do so. Others such as Sears Holdings, which began selling Whitney Automotive Group auto parts through Sears.comlast year, does this as well.

But Wal-Mart's attempt to establish a virtual online mall underscores some of the trends that are being seen in the online retail space.

In recent months, a bigger and bigger portion of online sales have been shifting to Amazon.com and other pure-play Internet retailers, says ComScore analyst Andrew Lipsman.

Although it is not completely clear why this is going on, there are some theories. For many online shoppers, browsing over to Amazon.com to begin the shopping process is becoming a "default" behavior, Lipsman said. Multi-channel retailers also may be spending less to promote their products online.

If this continues, it's a dangerous trend for Amazon's rivals.

It's shaping up to be a competitive Christmas holiday season, with retailers already jockeying for consumer dollars. Some online retailers are already previewing holiday merchandise, and the pace of email promotions has risen.

The biggest problem retailers are having online is getting consumers to stop window-shopping and start buying.

According to ComScore, the number of consumers going to online shopping sites rose in the second quarter, with some of the leading Web sites reporting double-digit increases in the number of unique visitors to their Web sites. However, online sales in the first half of this year are down slightly compared with the year-ago period, ComScore said.

This may be a sign that consumers are continuing to be more thoughtful about their purchases. Some may be researching prices aggressively before buying.

It's noteworthy that many of Wal-Mart's retail partners in its Marketplace venture are supplying products for categories where Wal-Mart is less established. For example, one partner is, which will give a boost to Wal-Mart by providing a wider range of fashionable accessories. Another, Dreams' Pro Team, provides sports memorabilia. And both of these categories could conceivably be important during the upcoming holiday shopping period.

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Retail