Walmart's US ecommerce sales hit 97% annual growth in its most recent quarter
- Walmart's US ecommerce sales hit 97% annual growth in Q2 since the pandemic is pushing consumers to shop online.
- And Walmart's ecommerce business may be set to reach new heights with its forthcoming subscription service.
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The retailer's US ecommerce sales grew 97% year-over-year (YoY) in its fiscal Q2 2021 (ended July 31, 2020), soaring past the 37% annual growth it reported in its fiscal Q2 2020 (ended July 31, 2019). This performance builds on Walmart's 74% YoY ecommerce sales growth last quarter as the coronavirus pandemic pushes consumers to shop online and use Walmart's pickup services to limit their risk of contracting the virus.
The retailer's surging digital performance may put it in a better position to compete in the ecommerce industry in the years to come post-pandemic.
- Walmart's third-party marketplace is growing quickly, which should help it battle Amazon. Its marketplace sales were up by triple digits, meaning they outpaced its overall US ecommerce business. Attracting more sales and customers during the pandemic could lead to return visits after the crisis, especially with Walmart adding more merchants through a partnership with Shopify. This would give Walmart a better answer to Amazon's third-party marketplace, which drives more sales for Amazon than its first-party business, potentially helping Walmart win consumers from Amazon.
- Surging sales and adjustments to its ecommerce team's structure are getting Walmart's ecommerce business closer to profitability. The retailer was able to significantly reduce losses from its Walmart.com business in the quarter thanks to its soaring sales, a temporary shift toward more profitable product categories, and the merge of its online and in-store merchandise and supply chain teams, CEO Doug McMillon and US CEO John Furner said on the earnings call. Making its ecommerce business profitable would benefit Walmart's bottom line and enable it to more sustainably compete with other etailers, making it a key goal for Walmart. And Walmart may be able to use the temporary benefits of increased sales and changes in product mix, along with adjustments to its team structure, to develop its business during the pandemic so that Walmart.com is closer to profitability than ever before when the crisis ends.
And Walmart's ecommerce business may be set to reach new heights, as its forthcoming subscription service could boost its appeal to customers and, in turn, revenue. The service, reportedly called Walmart+, could cost $98 annually and feature perks like free same-day delivery, discounts on fuel, and early access to promotions.
McMillon confirmed Walmart is moving toward a launch, but it's unclear when Walmart will introduce the offering. Whenever it debuts, it could convince consumers to shop with Walmart more regularly and provide a new revenue stream for Walmart's ecommerce business, boosting its sales growth and potentially its profitability. And Walmart would be wise to launch Walmart+ soon to make sure it's up and running before holiday shopping starts.
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