Walmart Sets Sights on 30% E-Com Growth

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Walmart Sets Sights on 30% E-Com Growth

By Nicole Giannopoulos - 06/10/2014
Walmart's task is to more quickly bring e-commerce together with physical stores to better serve shoppers, according to CEO Doug McMillon. While the retailer's comparable store sales growth has been slow the past several quarters, its e-commerce revenues have grown at a quick pace driven by several initiatives deployed over the last few years.
 
"First, we will be a customer-driven company. We've always said the customer is our boss and we'll make decisions based on how we can serve them better," said McMillon during a recent annual shareholders meeting. "Second, we will invest in our people. As we change and grow it will be our associates who will make the difference. Finally, we need to be at the forefront of innovation and technology. We will lead with urgency to get ahead of change."
 
McMillon noted that Walmart is picking up the pace of change to better serve the customer. "Customers will increasingly expect and require the best of both worlds – they want the excitement and the immediacy of shopping in a physical store and the freedom to shop whenever, however and wherever they want, they want an experience that seamlessly adapts to their life," McMillon continued. "Walmart can bring together our stores with new digital commerce capabilities to help customers save money, save time, and have access to what they want and need. Walmart will exceed their expectations."
 
Even though Walmart witnessed double-digit growth in e-commerce revenues for Q1, the channel contributed only 30 basis points to its U.S. comparable sales. Walmart stated its e-commerce revenues are likely to increase to $13 billion this year, from $10 billion last year. Even though the e-commerce business doesn't seem substantial at the moment, it holds tremendous potential for the future.
 
President and CEO of Walmart Global e-Commerce, Neil Ashe, highlighted the strong growth of e-commerce sales and how the retailer is bringing together digital and physical retailer to better serve customers. "We are integrating digital retail and physical retail to create one seamless, customer-driven Walmart experience. This is providing our shoppers with more value, more time, and greater access," said Ashe. "We are helping people save money in new and convenient ways so they can live a better life. And we're doing it by bringing together the best of e-commerce and the best of retail."
 
Walmart believes it can deliver 30% e-commerce revenue growth this year, driven by the industry growth, its omnichannel initiatives, enhanced online product variety and better delivery efficiency. The retailer can also leverage its immense presence to sustain competitive advantage over Amazon. The retailer saw 27% growth in its online revenues in the first quarter of fiscal 2015, suggesting that it is on course to delivery this promise.
 
"Our purpose of saving people money will always be relevant, but we'll do it in new ways," said McMillon. "We need to be at the forefront of innovation and technology. We will also develop new capabilities to serve customers in new ways. It is important that we all understand the shift that has happened in technology and retail, what it means for us and what we're doing to win," noted McMillon. "There's a lot of innovation and opportunity available to us."
 
Although the internet has changed the way people shop, as well as the retail landscape, it hasn't turned into a big business for some retailers. As a result, the retail industry is gradually shifting towards omnichannel retailing, integrating online and store channels to leverage customer reach and convenience of internet shopping to boost their revenues.
 
Walmart plans to utilize its physical presence across the country as an e-commerce fulfillment network. Through its ship-from-store service, the retailer uses the inventory of its nearest store to fulfill online orders. In addition, the retailer offers the pay-with-cash facility wherein customer can order online from a wide range of merchandise and pay with cash in-stores. Going forward, it is expected that the company will come up with additional strategies aimed toward the development of its omnichanel platform.
 
"Wherever we operate, everything starts with the customer, and I see customers' shopping habits changing more rapidly that I can remember," said David Cheesewright, president and CEO of Walmart International. "Customers are shopping more online, with mobile devices, and they really like convenience. If our customer changes fast, we have to change even faster if we want to continue to exceed her expectations."