With all the attention given to Amazon’s business, some investors may have forgotten about the former biggest name in retail, Walmart. But, the big box store appears to be back. With 40% growth in its e-commerce business last quarter, Walmart is transforming its strategy and riding the online shopping wave. Aaron Back reports at The Wall Street Journal:
Investors are starting to give Walmart credit for that growth but the stock price still underestimates the power of the retailer.
Leveraging its 2016 acquisition of Jet.com, Walmart today offers free, nationwide two-day shipping on thousands of household goods. It expects to be able to reach 40% of the U.S. population with grocery delivery by the end of this year. It also is offering free in-store pickup of groceries and other items ordered online at more than 1,800 stores, double the number of a year ago.
As a result, Walmart is deepening relationships with existing customers while reaching whole new audiences such as affluent, urban millennials who were the initial target customers for Jet.com, says Andrew Lipsman, retail analyst at research firm eMarketer.
In 2017, Walmart already was the fourth largest e-commerce company in the U.S. with around $15 billion of sales, according to eMarketer. That puts it well behind Amazon’s nearly $200 billion, but ahead of everyone else besides eBay and Apple .
Importantly, Walmart is bringing its traditional focus on low prices to the online world. In a survey of online grocery prices, JPMorgan analysts found that Walmart’s online prices were on average 5% below those of Kroger as of July, while prices on Amazon’s Fresh service were 12% higher.
Read more here.
Jeremy Jones, CFA
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