E-commerce growth sharpens Walmart’s digital focus
One of the bright spots in Walmart’s otherwise dismal fourth quarter was an online business that grew 30% to $10 billion and is forecast to exceed $13 billion this year.
Every executive participating in the company’s prerecorded earnings call Thursday morning spoke in some form or fashion about key digital initiatives and Walmart’s unique capabilities in the area of e-commerce. For example, Walmart president and CEO Doug McMillon sees an environment in which the company has the potential to create transformative growth in global e-commerce and mobile commerce.
“Our ability to combine online and mobile with the assets of the world’s largest retailer positions us to win at the intersection of physical and digital retail, which is a competitive advantage,” McMillon said. “Over the past year in particular, we have invested more significantly to improve our customer experience and fulfillment capacity. Cycle times on e-commerce related to capital investments are much more fluid than those for stores, so we can move faster and make decisions with speed. We’ll increase our e-commerce investment as opportunities present themselves.”
In the U.S., president and CEO Bill Simon said the e-commerce business contributed 30 basis points to same store sales and the company had its strongest Cyber Monday ever.
“Continued enhancements of our e-commerce platform and fulfillment network are top priorities, and we invested strategically to strengthen these areas,” Simon said.
The company recently opened a new fulfillment center in Texas that is processing more orders than planned and another new facility is expected to come online in a few weeks in Pennsylvania.
“The strategic location of these fulfillment centers complement others already in place and allow us to reduce the time to deliver merchandise,” Simon said.
The announcement of an accelerated rollout of smaller format stores is also expected to play an increasingly important role in delivering an omnichannel experience to shoppers.
Online enthusiasm extended to Sam’s Club as well where president and CEO Roz Brewer spoke of double digit online growth in the fourth quarter and recapped a recent structural change to drive further growth.
“Year-long site improvements have strengthened conversion, particularly in mobile transactions,” Brewer said. “To continue supporting this growth, we’ve named Jamie Iannone CEO of Samsclub.com, fully integrating the Sam’s Club e-commerce team with the Walmart Global eCommerce team. The integration allows us to build on our collective strengths and improve the member experience.”
Also working closely with the Walmart Global eCommerce division and president and CEO Neil Ashe is Walmart International lead by president and CEO David Cheesewright.
“I’m very excited about our continuing growth in e-commerce globally. It’s a big part of our plans going forward, and we’re working closely with Neil’s team around the world to ensure we’re leading at the intersection of physical and digital,” Cheesewright said. “Just in the last year, we’ve grown Yihaodian (in China) and Brazil ecommerce sales at nearly twice the market rate. We’re also seeing great progress in the U.K., Canada and Mexico.”
Even Walmart CFO Charles Holley got in on the act, talking about expectations for further improvement in site design, search and fulfillment.
“We’ll also continue to make strategic acquisitions to build out our technology, talent and capabilities, and we will increase our investment when the right opportunity or acquisition presents itself,” Holley said.
Excluding acquisitions, Holley said Walmart’s global e-commerce sales will top $13 billion this year.