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How Walmart Is Trying to Spur Online Sales Growth

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Moosejaw acquisition

Walmart (WMT) continues to focus on enhancing its online channels to attract more consumers and also to fight intense competition from online retailers like Amazon (AMZN). In its latest move, Walmart announced the acquisition of Moosejaw, an online retailer for activewear and outdoor gear categories, for about $51 million. The acquisition was completed on February 13. Moosejaw has a large web presence and ten physical stores. The acquisition will enhance Walmart’s online business and strengthen its presence in the activewear and outdoor gear categories.

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Improved online sales

The company’s investment in its online business is reflecting in higher online sales. In fiscal 3Q17, which ended on October 31, 2016, the company’s global e-commerce sales surged 20.6% on a constant currency basis. This growth in Walmart’s online sales was a major improvement compared to the 11.8% growth in fiscal 2Q17 and 10.0% growth in fiscal 3Q16. Key rival Target’s (TGT) comparable online sales rose 26% in fiscal 3Q16. Walmart and Target together constitute 4.6% of the iShares U.S. Consumer Services ETF (IYC).

Growth initiatives

Walmart sees a lot of growth opportunity in the online grocery segment. In the 3Q17 conference call, Greg Foran, president and CEO of Walmart US, mentioned that the company has rolled out online grocery services in 100 markets and about 600 locations, up from 400 in fiscal 2Q17.

The company is also trying to boost its sales by leveraging the capabilities of Jet.com, a US-based e-commerce company, acquired by Walmart in September 2016.

Walmart offers an extensive online product assortment of over 23 million items, which continue to grow. To ensure speedy delivery, Walmart offers same-day store pick-up facilities in over 4,600 stores. On January 31, 2017, the company announced free two-day shipping to home and stores, without any membership fee, on over two million items. The company also lowered the minimum purchase required for free shipping to $35 from $50. This new facility replaced the company’s ShippingPass offer, which had an annual membership fee of $49. These efforts are expected to further enhance Walmart’s top line.

We’ll look at earnings expectations for Walmart in the next part of this series.

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