Retail giant Walmart keeps on pushing back against Amazon, winning more on-line sales.
Last week, the company reported a 2.8% jump in same-store sales and a 37% jump in on-line sales for the fiscal second quarter. That’s on the top of a 3.4% jump in U.S. Q1 comp sales, and a 37% jump in on-line sales for the first fiscal quarter.
All in all, Walmart has reported 19 quarters of positive transactions, and the future looks brighter according to comments from its CEO following last week’s report. This means that the retail giant’s big comeback is for real.
And that’s bad news for Amazon.
“Walmart’s report last week is just the latest demonstration of the retailer’s remarkable shift,” says Jeff Yastine, Senior Equities Analyst at Banyan Hill Publishing.
He traces this shift back to 2017, when Walmart purchased internet seller Jet.com, and brought Jet’s main executives into its ranks, which has helped Walmart achieve double-digit on-line sales in the quarters that followed, right up to the present day.
Other big brick-and-mortar retailers have launched similar strategies as a way to push back against Amazon.
“Big, smartly-run legacy retailers are no longer conceding the digital playing field, which means Amazon’s days of unfettered growth are largely over,” says Yastine. “A good example can be seen with Minneapolis-based Target, which was so uninterested in digital sales that it actually paid Amazon to run (and fulfill) its internet operations until 2011. In recent years Target has also come on strong, investing in warehouses, warehouse robotic systems, and even pioneering its own form of ‘in-store’ fulfillment – using its own stores as e-commerce warehouses – so it can provide same-day delivery on many basic items, just like Amazon.”
Clement Thibault, analyst at financial markets platform Investing.com, praises Walmart’s one-day shipping. “The name of the game is one day shipping,” he says. ”Walmart already covers 75% of the U.S. with its NextDay shipping, and it allows Walmart to give Amazon a real run for their money. Evidently, it works. Walmart has been wise enough to put an emphasis on online, and decided not to just concede to Amazon. The e-commerce market can indeed support more than one giant retailer, and Walmart has made all the right moves so far. Walmart has managed to execute a strategy in a hostile and competitive environment, and that is the mark of a truly great company.”
Meanwhile, Walmart has leveraged its extensive store network to expedite online orders by shipping from its stores rather than from remote warehouses, as has been the case with Amazon.
And it offers customers the choice of placing orders online and picking up merchandise at neighborhood stores, saving time and avoiding shipping fees.
That’s something Amazon has been missing.
Total number of Walmart stores in the US
Source: Statista.com 5/18/2019
Simply put, Walmart is winning more on-line sales by “turning the tables,” on Amazon, sending the online giant rushing to expand its own brick and mortar presence, by acquiring traditional retailers like Whole Foods — and by planning to open more grocery stores around the country to cater to markets not served by Whole Foods.