Walmart discusses e-commerce plans as growth slows

Walmart expects e-commerce to continue to grow, even though the segment underperformed in the fourth quarter.
Walmart expects e-commerce to continue to grow, even though the segment underperformed in the fourth quarter.
(File Photo)

Walmart reported a 23% increase in e-commerce sales for the fourth quarter — a significant number that nonetheless pales in comparison to the 50% third-quarter increase.

“The majority of this slowdown was expected as we fully lapped the Jet acquisition as well as creating a healthier long-term foundation for holiday,” Walmart president and CEO Doug McMillon said in an earnings call Feb. 20. “A smaller portion of the slowdown was unexpected, as we experienced some operational challenges that negatively impacted growth. Overall, we finished the year with e-commerce sales growth of more than 40%, so we feel better about the year than the quarter.”

The company is forecasting that online sales will grow 40% again this year.

McMillon explained that customers who shop both online and in stores are great for the business.

“U.S. customers that shop us in-store and online spend nearly twice as much as customers that only shop with us in stores,” McMillon said. “Their loyalty to Walmart strengthens overall. Online grocery customers are a great example as they spend more with us in total once they start using the service.”

With that in mind, Walmart plans to nearly double the number of online grocery pickup locations in the U.S. this year.

The company will also continue to develop its strategy for grocery delivery.

“We’ve had this small pilot going on with our own associates, and we’ll continue to play around with that and learn what works there, but the expansion will happen through a variety of platforms,” McMillon said. “We’ll use, depending on the spot in the country, different providers to get the product to the customer, and we’ll be keeping an eye on (net promoter scores) in particular.

“Our online grocery business has a really high net promoter score, and we want to — as we start to grow delivery capabilities — ensure that the customer experience is as good through delivery as it is for pickup, so we’ve got some things to learn there and it will happen at a pace based on the customer experience,” McMillon said during the call.

For the fourth quarter, Walmart reported $136.3 billion in revenue, up about 4% from the same period the previous year.

For the recently concluded fiscal year, Walmart reported $500.3 billion in revenue, up 3% from the previous year.

 

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