Walmart puts Amazon on notice in 3rd quarter
Unseating Amazon as the biggest player in e-commerce is a tall — maybe impossible — task. But Walmart is giving the online titan a run for its money.
“It won’t become Amazon, but it doesn’t have to,” Clement Thibault, an analyst with Investing.com, wrote in a note Thursday after Walmart reported its latest earnings. “It has to make sure it remains a viable alternative to Amazon. The pie is big enough.”
Walmart, which has been challenging Amazon by adding products, partners and perks, saw online sales soar in its most recent quarter. The nation’s top retailer reported a 50% increase in U.S. online sales during the three-month period that ended Oct. 31.
“We have momentum, and it’s encouraging to see customers responding to our store and e-commerce initiatives,” Doug McMillon, Walmart’s president and CEO, said in a statement.
The company’s moves to revamp its stores and hone its customer service appear to be paying off as sales at U.S. stores open at least a year — a key industry measure of financial performance — rose 2.7%. Traffic, which has been dipping at many retailers as more consumers shop online, climbed 1.5%.
The retailer has been shaping up as one of the key competitors to Amazon, buying online marketplace Jet and niche sites such as menswear retailer Bonobos, to attract a more affluent, fashion-conscious shopper.
Walmart tripled to more than 70 million the number of items available on its website. This week, it announced that it will partner with upscale retailer Lord & Taylor to feature a branded shop on Walmart.com starting next spring.
Walmart has been making the most of its more than 4,700 U.S. stores. It offers discounts to customers who pick up purchases they’ve made online and will roll out the ability to retrieve online grocery orders to an additional 1,000 locations next year.
Other moves include the launch of a speedier returns process that starts with a few clicks of the Walmart app and ends with a designated line at a local store. And Walmart is paying some employees extra if they drop off orders on their way home, a service that may expand. Shoppers may also head to stores because some items are cheaper there than online, a difference Walmart.com displays by putting the dueling prices side by side.
“Although online has been a success story for Walmart, the second reason for its U.S. growth is the performance of stores,” Neil Saunders, managing director for retail consultancy Global Data, said in a note. “For a retailer of its size and scale, we believe that Walmart’s ability to keep its stores growing is impressive.”
Walmart’s $1 in adjusted earnings per share was three cents higher than what S&P Global analysts had expected for the company’s third quarter. And total revenue reached $123.2 billion, an increase of $5 billion, or 4.2%, over the the third quarter of 2016.