• Advertiser Disclosure

    You’re our first priority.
    Every time.

    We believe everyone should be able to make financial decisions with confidence. And while our site doesn’t feature every company or financial product available on the market, we’re proud that the guidance we offer, the information we provide and the tools we create are objective, independent, straightforward — and free.

    So how do we make money? Our partners compensate us. This may influence which products we review and write about (and where those products appear on the site), but it in no way affects our recommendations or advice, which are grounded in thousands of hours of research. Our partners cannot pay us to guarantee favorable reviews of their products or services.

  • Walmart’s Fight Against Amazon Is Picking Up Steam

    Walmart’s U.S. e-commerce sales rose 43% in fiscal third quarter as the world’s largest retailer doubles down on fight against Amazon. Photographer: Timothy Fadek/Bloomberg

    In Walmart’s bid to take on Amazon, the world’s largest retailer once again showed it’s willing to spend and sacrifice profit margin for market share gain and other potential competitive advantages.
    Walmart on Thursday reported a better-than-expected U.S. comparable sales gain of 3.4% in the quarter that ended October 31 and said it gained market share in categories including food, consumables and “many areas” of general merchandise. On a two-year stacked basis, those sales rose 6.1%, the first time in over 10 years that Walmart said it’s seen such a scorecard.

    While higher store traffic, driven by demand for fresh food, and a higher average transaction amount contributed to the sales growth, e-commerce also played a critical role. Walmart’s U.S. e-commerce sales surged 43%, contributing about 1.4 percentage points to last quarter’s results.
    But those gains have come at a cost. Walmart U.S.’s third-quarter gross margin rate narrowed, hurt primarily by its pricing strategy, higher transportation expenses and the increasing mix of e-commerce growth, the company said. Year to date, the company’s total capital spending increased slightly to $7 billion, while year-to-date operating income declined 0.5% to $15.9 billion.

    As Walmart aggressively seeks to use its store fleet as a key weapon against Amazon,  results at its brick-and-mortar stores are increasingly intertwined with online sales. Walmart said Thursday it has nearly 2,100 Walmart U.S. locations with grocery pick-up service and is on track to offer same-day grocery delivery at approximately 800 stores by the end of year.
    And as Walmart has made it possible for its online marketplace sellers to offer free two-day shipping, its more than 4,700 U.S. locations – located within 10 miles of the 90% of the U.S. population – will help facilitate online returns, Walmart said. That may give it a potential competitive edge over Amazon as studies have showed that consumers like the convenience of returning online orders to physical locations. (Amazon’s moves to solve that pain point includes partnering with Kohl’s to process its customer returns.)
    With expanded e-commerce assortment key to attracting online shoppers, Walmart added over 2,000 brands to Walmart.com since April. And on its relaunched Jet.com, aimed at affluent, urban millennials, Nike and Bonobos, a Walmart acquisition, have begun to sell there in recent weeks. Jet.com also partnered with Blue Apron recently to sell its meal kits.
    Battling Amazon
    However, as much as Walmart has put a stake in the ground against Amazon, it still has a ways to go—especially since Amazon hasn’t stopped upping its game either. A recent pricing study of 100,000 products, for instance, showed that the Seattle-based giant remains the undisputed price leader on a broad selection of popular items.
    Different market share studies also show that Amazon still commands a sizable lead. For instance, Amazon’s online U.S. market share rose to 46% in 2017 from 24% in 2012, while Walmart’s climbed to 4.3% from 2.9% during the same period to replace Apple in the No. 3 spot, up from No. 4, according to Euromonitor. EBay, while still No. 2, saw its share decline to 7.4% from 8.7%.
    Even though Walmart has pitched its two-day free shipping service without Amazon Prime-like membership, its “millions” of items available for that service still trails Amazon Prime’s more than 100 million items that are eligible for its two-day free shipping, not to mention the $119 annual Prime membership comes with Prime Video and other perks.
    But Walmart is determined. At a sleek new Walmart tech hub in Austin, Texas that opened this year, engineers from Walmart and Microsoft, which is seeking to steal Amazon’s AWS cloud service share, will work side-by-side for the first time. The two giants announced a strategic partnership where Walmart will migrate its various data assets, including Walmart.com, to Microsoft’s Azure cloud platform and tap into Microsoft’s machine learning and artificial intelligence, Walmart said in a blog post this month.
    Walmart last quarter also made more acquisitions, including online lingerie seller Bare Necessities. It has invested in a cyber security startup founded by former leaders of Israel’s top intelligence unit as Walmart seeks to glean more personalized consumer data insight. Overseas, in August it completed its $16 billion purchase of Flipkart in India, a key growth market for Amazon.
    “There’s a pattern here – our company is moving faster and we’re accelerating innovation,” said Walmart President and CEO Doug McMillon in prepared statement Thursday.
    But how fast it is moving against Amazon is another question.
    Related on Forbes: Microsoft, Nielsen partner to bring personalized closer to reality for the CPG industry
    Related on Forbes: Why Walmart is investing in this Israeli startup 
    Related on Forbes: Amazon offers free holiday shipping on all orders
    Related on Forbes: How Macy’s Is Proving It’s Still Relevant To American Malls
    Read More

    LendingTree

    Login/Register access is temporary disabled
    Compare items
    • Total (0)
    Compare
    0