Walmart’s E-Commerce Sales: A Vital Growth Driver
Strong e-commerce sales
Wal-Mart Stores (WMT) has invested immensely in fortifying its position in the online space against its bigger rival, Amazon.com (AMZN). The company’s strategic investment to create an omnichannel presence has started to pay off, however, as Walmart is now witnessing a healthy sales trend in its e-commerce arm.
Walmart’s global online sales rose 15.5% on a constant currency basis during fiscal 4Q17, while online sales at its US segment shot up 29.0%. The growth rate in global online sales in fiscal 4Q17 was higher than the 8.0% growth in fiscal 4Q16 but decelerated from the 20.6% growth in its fiscal 3Q17 online sales. The company plans to continue investing in e-commerce to accelerate sales growth as the segment gains traction.
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During its fiscal 4Q17 conference call, Doug McMillon, Walmart’s President and CEO (chief executive officer), noted that the company is now the second-largest online retailer in the US by revenue. It’s also among the top three online retailers in terms of traffic, and its Walmart app remains one among the top three apps in retail.
What drives Walmart’s e-commerce segment
Walmart’s recent acquisitions, its investments in China’s JD.com (JD), expansion of online grocery, store pickup offering, and direct-to-home offerings, free two-day delivery on orders more than $35, and the scan-and-go app are all helping the company to generate strong online sales.
Meanwhile, Walmart’s acquisitions of Jet.com, ShoeBuy, Moosejaw, and Hayneedle have strengthened the company’s expertise into specific categories while enhancing its online merchandise offerings. Moreover, the news has been spreading around markets that Walmart is acquiring ModCloth, an online women’s fashion retailer.
A meaningful contribution
Although the company didn’t announce the numbers for Jet.com during the last reported quarter, the management noted that it contributed meaningfully to its growth. Walmart is expected to report healthy online sales growth as its e-commerce initiatives bode well with consumers.
Notably, ETF investors looking for exposure to the Consumer Discretionary sector might consider ETFs like the VanEck Vectors Retail ETF (RTH), which invests about 33.1% of the portfolio holdings in Amazon, Walmart, Kroger (KR), and Costco (COST).
Now let’s take a closer look at the company’s US business.