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Wal-Mart’s online sales soar as it pursues Amazon

LiveMint logoLiveMint 18-05-2017 Matthew Boyle

Wal-Mart’s online sales soar as it pursues Amazon

New York: Wal-Mart Stores Inc. gained momentum in its crusade against Amazon.com Inc., with its online sales growing at the fastest clip in at least five years.

The e-commerce business saw gross merchandise volume — a measure of all the goods it sells online — soar 69% in the first quarter, Wal-Mart said on Thursday. Total revenue climbed 1.4% to $117.5 billion.

The results signal that Wal-Mart is getting a payoff from an ambitious online expansion, which included last year’s $3.3 billion acquisition of Jet.com Inc. The Bentonville, Arkansas-based company now boasts 50 million items on its website, up from 35 million the previous quarter.

“All of a sudden, Wal-Mart is the primary competitor to Amazon, as opposed to a fragmented cluster of people,” said Greg Portell, a partner at consulting firm A.T. Kearney.

Growth at Wal-Mart’s brick-and-mortar stores was more measured, though it still outpaced estimates. US same-store sales rose 1.4%, beating the 1.3% gain projected by analysts. That marked the 11th-consecutive period of positive sales in the company’s home market.

Earnings amounted to $1 a share. Analysts had estimated 96 cents.

“We’re encouraged by the start to the year,” chief executive officer Doug McMillon said in a statement. “Our plan is gaining traction.”

Jet deal

McMillon has used the Jet acquisition as a catalyst for online growth. After buying that business in September, he put co-founder Marc Lore in charge of US e-commerce. Wal-Mart followed up with some smaller deals, snapping up outdoor retailer Moosejaw and women’s apparel seller ModCloth earlier this year.

It’s also held talks to buy men’s clothing startup Bonobos Inc. for about $300 million, a person familiar with the matter said last month.

The deals have helped burnish Wal-Mart’s online image, though the majority of e-commerce growth came from its longstanding Walmart.com site last quarter.

At the same time, Wal-Mart is striving to improve its brick-and-mortar experience. Cleaner aisles, faster checkouts and fewer missing items have been the focus for Wal-Mart’s US stores chief Greg Foran. The New Zealander also is beefing up the retailer’s store-brand and services business to provide a buffer against both Amazon and German discounter Aldi.

He’s replaced the clunky handheld bar-code scanners used by employees since 1984, opened training facilities for 200,000 workers, and freed store managers from the backroom to spend more time on the sales floor.

“With all the hullabaloo online, it’s easy to forget that in-store execution still means the world to them,” said Jennifer Bartashus, an analyst at Bloomberg Intelligence. Bloomberg

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