Grocery drives online growth at Walmart (WMT)
This story was delivered to BI Intelligence "E-Commerce Briefing" subscribers. To learn more and subscribe, please click here.
Walmart’s grocery segment is behind the majority of its impressive online sales growth recently, according to Slice Intelligence.
Based on Slice’s sales data, which is similar to GMV, Walmart.com, Walmart Grocery, and Sam’s Club together grew 73% year-over-year (YoY) in Q2 2017, with grocery accounting for 26% of all of Walmart’s US e-commerce sales for the quarter. Meanwhile, Walmart.com accounted for about 50% of e-commerce sales in Q2 — down from approximately 70% in Q2 2016.
Walmart Grocery made up more of Walmart’s US e-commerce sales than Sam’s Club and Jet.com combined in Q2. The click-and-collect offering barely accounted for any e-commerce sales just two years ago, but appears to have more than doubled in size from June 2016 to June 2017, as it now makes up more than a quarter of all sales online. This indicates that, while the spotlight is often focused on Walmart’s e-commerce spending spree, its click-and-collect grocery strategy — which includes using geofencing to notify employees when customers are at the store to retrieve their orders and 24-hour kiosks that automate grocery pickup — is the fastest-growing online segment for the company.
Walmart has been investing in online grocery to maintain its industry-leading position. Grocery accounts for 56% of Walmart’s total sales, and, with the online grocery industry projectedto be worth $100 billion by 2025, the company is intent on maintaining its position as the leading US grocer. Its click-and-collect strategy has likely been successful because of the proximity of its stores to customers’ homes — there is a Walmart within 10 miles of approximately 90% of the US population, according to CEO Doug McMillion. Moreover, the addition of kiosks and geofencing technology makes it even more convenient for customers to pick up their orders by ensuring the process itself is smooth and seamless. The company is now testing delivery options, for those who don’t want to pick up their groceries, in an effort to build on its successful online grocery arm.
However, the retailer has a new slate of grocery competitors with strong digital capabilities, which could eat into Walmart Grocery’s growth, potentially ending Walmart’s e-commerce renaissance. Amazon has now acquired Whole Foods and looks ready to revamp the grocer with it e-commerce and logistics capabilities, Aldi is adding delivery while maintaining its low prices, and even smaller grocers are getting in on digital sales. If Walmart plateaus on its innovations in the online grocery space, it could lose sales to any number of these competitors, eroding its growth in e-commerce altogether.
To receive stories like this one directly to your inbox every morning, sign up for the E-Commerce Briefing newsletter. Click here to learn more about how you can gain risk-free access today.
No comments: