Is Walmart Poised to Triumph in E-Commerce?

Press enter to search
Close search
Open Menu

Is Walmart Poised to Triumph in E-Commerce?

By Jamie Grill-Goodman - 08/26/2016
After several quarters of disappointing online sales, Wal-Mart Stores, Inc.'s e-commerce sales increased 11.8% in its second quarter 2017 with U.S. e-commerce results stronger than key international markets for the retailer. While one quarter of sales acceleration doesn't spell success, Walmart has been making huge moves to grow its online sales.

The retailer recently agreed to purchase e-commerce retailer Jet.com, Inc. for approximately $3 billion in cash, an acquisition could give Walmart's online business the edge it needs to compete with Amazon. 

In July, after months of gradually rolling out Walmart Pay, the mobile payment solution became available in all Walmart stores in the U.S.

In China, Walmart recently announced it will sell its Yihaodian website to JD.com Inc. JD's significant presence online, where Wal-Mart and Sam's Club will feature prominently, allows Walmart the opportunity to extend the reach of its brands to millions of new customers.

"Whether it’s through online grocery, Walmart Pay, or broadening our reach in China through the alliance with JD.com, we're making it easier for customers to access products when and how they want," said Brett Biggs, EVP & CFO, Walmart. "Now, with the agreement to acquire Jet.com, we're building on our e-commerce foundation and creating an opportunity to accelerate e-commerce even further."

Walmart has also broadened its e-commerce assortment and expanded online grocery pickup to 30 more markets this quarter bringing the total to more than 60 markets and nearly 400 locations. Since the beginning of the year, Walmart added about 7 million new items to the marketplace assortment and now offers approximately 15 million SKUs.
 
"The distinctions that we talk about today between stores, apps, pick-up, delivery and sites are continuing to blur into the background for customers," noted Doug McMillon, President & CEO Walmart. "For them, it’s just Walmart."

New Leadership

Walmart's current global e-commerce chief, Neil Ashe, will leave the company by the end of the fiscal year. Once the Jet.com acquisition is complete, Marc Lore, current President and CEO of Jet.com will become Walmart's new President and CEO of e-commerce, reporting to McMillon. Lore will be responsible for both the Walmart and Jet brands in the U.S. Not only is Lore the founder of Jet.com; he also co-founded Quidsi, which owned Diapers.com, Soap.com, and Wag.com, before it was sold to Amazon in 2011. 

During Ashe's tenure, Walmart more than doubled its e-commerce GMV, became the second most trafficked e-commerce site in the U.S., re-platformed Walmart.com, and opened a national fulfillment center network.

"Building on this solid foundation, we made some strategic decisions to position ourselves for the future in the priority markets of the U.S. and China, including the announcement last week to acquire Jet.com," said McMillon.

"Operating Walmart.com and Jet.com will allow us to reach even more customers and drive a higher level of growth more quickly. One of the things we like about the technology they've developed is that it rewards customers in real-time with savings on a basket of goods and puts them more in charge of the price they pay."

Jet has created a unique way to deliver the lowest cost basket online and building a basket of goods rather than ordering one item at a time allows shipping economics in Walmart's favor. Customers won’t see changes immediately, however, as Walmart awaits government approval and the necessary tech platform changes.

"While there is still a lot of work to do in executing our multi-year plan, we're encouraged by the results we're seeing," said Biggs.