After years of floundering while Amazon and other e-commerce innovators ate its lunch, Walmart yesterday reported a 63% spike in online sales for its latest quarter, building out on a 29% improvement in the previous quarter. “We're transforming to become more of a digital enterprise,” says CEO Doug McMillon.
“Total revenues climbed 1.4% to $117.5 billion, with same-store results also advancing 1.4% in the U.S., powered by increasing foot traffic at its stores,” as Marketing Daily’s Sarah Mahoney reports in her story about the new “TargetRun And Done” campaign from its bricks-and-mortar rival this morning.
“Walmart’s report stood out amid a largely gloomy environment for retailers after chains like Macy’s, Kohl’s, J.C. Penney and Target saw declines in comparable-store sales. Even off-price retailer TJX Cos., which has done better than many as customers hunt for bargains, missed forecasts for that sales measure,” points out the AP’s Ann D’Innocenzio. “And it underscores Walmart’s efforts to narrow the gap between itself and online leader Amazon, and widen the distance between itself and other competitors.”
It’s doing that by improving synergies between its physical and digital operations.
“Walmart has been trying to capitalize on its network of 4,700 stores by offering perks to those who would rather make purchases on their smartphones or laptops and come to pick them up. It now offers more than 50 million items online vs. 10 million at this time last year. And it recently began offering discounts on roughly 10,000 items that are online exclusives if shoppers are willing to pick them up at a local store. The selection will grow to more than 1 million by the end of next month,” reports Charisse Jones for USA Today.
“We are particularly pleased that Walmart is using discounting to encourage online shoppers to use more economical store pickup rather than delivery. We see the effective use of its real estate assets as one of Walmart's major strengths over Amazon,” Neil Saunders, managing director of GlobalData Retail, tells Chain Store Age’s Marianne Wilson.
Walmart bought ecommerce start-up Jet.com last year and its CEO, Marc Lore, now leads Walmart’s ecommerce efforts.
“Customers are placing more repeat orders and spending more,” Lore said during the media call, Matthew Boyle reports for Bloomberg Technology. “The companies we have bought have helped to build our assortment and give us expertise in categories that are hard to crack.” Lore also disclosed that the company now offers curbside pickup of online grocery in 670 locations.
Moody’s analyst Charlie O’Shea “said the positive impact of Jet.com was ‘significant’ for Walmart’s online business as a whole,” reports Anna Nicolaou for Financial Times. “‘The level of acceleration will continue to widen the gap between Walmart and its brick-and-mortar competitors, he said. ‘Given the current retail landscape, with many retailers experiencing challenges across multiple categories, we believe Walmart will continue to turn up the competitive heat.’”
“In addition to Jet.com, Walmart recently bought e-commerce companies ModCloth, ShoeBuy, and Moosejaw, but McMillon said those deals were small and meant to speed up innovation within Walmart.com,” Phil Wahba reports for Fortune. “‘The acquisitions have received a lot of attention but our plan in e-commerce is not to buy our way to success,’ he said. Walmart said most of the e-commerce growth was organic rather than from those deals.”
“Shares of Walmart rose 2% in early trading Thursday on the news, adding to the stock's already impressive year-to-date rally. Walmart is up 11% so far in 2017 while the S&P Retail ETF (XRT), which includes many struggling chains, is down 7%,” reportsCNN Money’s Paul R. La Monica.
As giddy as executives, analysts, investors and even journalists may seem about the results, Forbes contributor Panos Mourdoukoutas, who is chair of the Department of Economics at LIU Post in New York, puts it all in perspective: “Walmart can spend hundreds of millions of dollars buying up online retailers. It can shatter more neighborhood stores. But it will never beat Amazon,” he writes.
“For a simple reason: it isn't a technology company. It’s a retailer using technology, and that’s not good enough to attract software developers — the ultimate source of competitive advantage in the Internet space.”
Coders, not marketers, rule. Who’d have thunk it?