Strong online sales growth
Wal-Mart Stores’ (WMT) global e-commerce sales grew 20.6% on a constant currency basis in fiscal 3Q17 (ended October 31, 2016). This growth was significantly higher than the 11.8% growth in fiscal 2Q17 and 10.0% growth in fiscal 3Q16.
Key growth drivers
The strong growth in Walmart’s e-commerce sales in fiscal 3Q17 was a result of the company’s continuous investment in initiatives to strengthen its online capabilities and enhance its merchandise offerings. By comparison, Target’s (TGT) comparable online sales rose 26% in fiscal 3Q16 (ended October 29, 2016).
Walmart and other retailers are focusing on their online businesses to fight the intense competition from Amazon.com (AMZN). Amazon’s net sales grew 29% to $32.7 billion in 3Q16.
In fiscal 3Q17, Walmart extended its online grocery facility to about 35 new markets and 200 additional locations. With this expansion, Walmart’s online grocery facility is now available in 100 markets and about 600 locations.
The company is attracting consumers through expanded merchandise assortment. In the fiscal 3Q17 conference call, Walmart Chief Financial Officer Brett Biggs stated that the company added over eight million SKUs (stock keeping units) to its online business over the past three months. The company currently offers over 23 million units through its online channels.
Acquisitions and strategic partnerships
Walmart’s online sales in fiscal 3Q17 included a few weeks of sales from Jet.com. Walmart acquired Jet.com in September 2016 to accelerate its online growth by leveraging the latter’s assets and online capabilities.
Walmart is entering into strategic partnerships to boost its online sales. In October 2016, Walmart announced a $50 million investment in New Dada, a joint venture of JD.com and Dada. New Dada is a leading local on-demand logistics and grocery O2O e-commerce platform based in China. New Dada’s network will help Walmart enhance its customer service for online shoppers, offering a two-hour delivery on groceries ordered from Walmart stores using the JD Daojia Dada app.
We’ll discuss the company’s margins in the next part of this series.