New delivery service gains popularity
Digital is one area of business where Walmart (WMT) is firing on all cylinders. The company started testing its home delivery of online orders through its associates. In a blog post, Marc Lore, president and CEO of Walmart’s US e-commerce business, stated that the company started testing the new online delivery service in three of its stores—two in New Jersey and one in northwest Arkansas. The service is getting an overwhelming response from customers and associates.
In the wake of consumers’ shift towards online shopping, Walmart has taken all the right steps to strengthen its position against Amazon (AMZN). Walmart grew its market share in the digital space—reflected in the above graph, which shows the company’s strong sequential improvement in US digital sales.
Walmart’s digital sales in the US rose 63% in fiscal 1Q18—compared to 22% growth registered by Target (TGT). Meanwhile, Amazon’s North American business marked 23.5% growth during the last reported quarter.
Reduces costs and shipping time
Walmart’s latest move not only ramps up the delivery process and time, but it also reduces the last mile shipping cost. Associates who plan to opt for the program will be able to earn extra compensation. The company has about 4,700 stores across the US with more than a million workers, which could give Walmart an edge over the competition and be a game changer.
In the past year, Walmart has taken a series of strategic measures in e-commerce that position the company to accelerate its sales growth. Through the acquisition of Jet.com and series of small acquisitions including ShoeBuy, Moosejaw, Hayneedle, and ModCloth, Walmart beefed up its digital business.
Meanwhile, online grocery pickup, free two-day delivery on orders above $35, and recently announced pickup discounts are very popular among customers and drive online sales.
Given the company’s successful strategic initiatives, Walmart stock has risen ~15.5% year-to-date as of June 1, 2017. In comparison, the S&P 500 (SPX) and the Consumer Staples Select Sector SPDR Fund (XLP) have generated returns of 8.5% and 10.4%, respectively.