Walmart may be traditionally known for its low prices and large stores, but the retailer has also managed to grow an Amazon-like e-commerce business.
The “every day low price” retailer reported a 22% YoY rise in Q2 e-commerce sales in the US. At Amazon, sales from online stores grew just 5% for the same period, albeit across a much larger base. Walmart said its e-commerce growth was “led by store-fulfilled pickup and delivery.”
Meanwhile, Walmart’s e-comm business is also getting closer to becoming profitable, CFO John David Rainey told investors in June, per Bloomberg. Walmart’s e-commerce business has become one of its main growth engines. It has also been growing at a faster clip than Amazon. According to data from eMarketer, Walmart’s e-commerce sales in the US have grown more than fivefold from 2017, when they totaled $13.8 billion, to $73 billion last year. A number of factors have contributed, from its marketplace expansion to its 37% online grocery share in Q2.
“Across both food and general merchandise [on] the marketplace, Walmart has been using its stores to much better effect,” Neil Saunders, managing director at GlobalData, told Retail Brew. “And whilst Amazon has certainly been increasing the speed of delivery, I think that Walmart definitely has an edge there,” he added.
Walmart’s US e-commerce sales jumped 74% in Q1 2021, during the coronavirus pandemic.
“Walmart’s e-commerce business was slow to gain momentum until the pandemic, and it has since seized on an Amazon-style playbook to drive growth via the Walmart+ membership offering,” Sky Canaves, eMarketer principal analyst for retail and e-commerce, told Retail Brew. In the most recent quarter, Walmart+ memberships rose in “double digits,” CEO Doug McMillon noted during the Q2 earnings call.
“I think when it comes to grocery, they’ve done a great job of building a very strong proposition centered around food, including using Walmart+ to activate customers,” Saunders told us. “And a lot of shoppers are getting very comfortable using Walmart for their online grocery shops.”
As of 2019, Walmart offered grocery pickup at more than 3,000 locations, and grocery delivery at more than 1,600 locations. Walmart has more recently upgraded its delivery reach to 15 million more homes.
“E-commerce is sustaining its strong growth and pulling new value streams and profit pools along with it,” Rainey said during the Q2 earnings call. “Simply put, our value proposition is broader and more relevant to our customers and members than ever before.”
"I think this is going to be a good growth year for Walmart," Saunders told us. "Things may slow down a little bit in the e-commerce business, but they're still going to be taking market share overall."