The company's US online sales increased 40 percent last year, buoyed by a successful expansion of an online grocery business; the digital-first brands and digital-first talent it has acquired have breathed new life into its portfolio; and it has shed at least part of its reputation for being a digital dinosaur.

Walmart is, by most measures, in a more competitive position than it was before it acquired Jet.

But it's still far behind Amazon, and inside Walmart, tensions are rising. Multiple sources tell Recode that the company is projecting losses of more than $1 billion for its US e-commerce division this year, on revenue of between $21 billion and $22 billion. Walmart does not disclose these figures publicly and declined to comment.

That size loss is an eye-popping figure for a company that is used to printing cash and that prides itself on its profitable operations; the overall Walmart business brought in nearly $7 billion in profits during the last fiscal year.


Lore has aggressively pitched the company's management and board on the idea that Walmart needs to spend billions a year on new warehouses if it's going to seriously compete online with "the Everything Store" and its speedy delivery offerings, sources say.

Amazon has 110 fulfillment centers in the US, while Walmart has 20 at most. Walmart's in-store selection is also not large enough to use stores to fulfill online general merchandise orders at a scale that would rival Amazon's product catalogue.

The problem is that building the online version of the Everything Store requires millions more products, and that means two things that Walmart's current infrastructure does not support: dozens more e-commerce warehouses and a lot more merchants and brands selling through Walmart.com.

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