Could Walmart’s Digital Business Continue to Grow in Fiscal 4Q18?
What to expect from Walmart’s digital business
Walmart’s (WMT) top line is likely to benefit from continued strength in its digital business. The company expects its e-commerce business to generate sales of $11.5 billion in fiscal 2018. Digital sales are expected to grow 40% in fiscal 2019. Its e-commerce sales grew 63%, 60%, and 50% in fiscal 1Q18, fiscal 2Q18, and fiscal 3Q18, respectively, and contributed meaningfully to its overall comps (comparables) growth.
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What’s driving its e-commerce sales?
According to Walmart, the key to its booming digital sales is its focus on customer-friendly initiatives that save both time and money. The company expanded its online grocery pickup service to more than 1,000 stores and remains on track to add another 1,000 locations offering the service by the end of fiscal 2019.
Emphasizing the importance of fast delivery, Walmart acquired Parcel to test same-day delivery in New York City. The company is also testing several innovative delivery mechanisms, including unattended delivery directly into the customers’ refrigerator. It’s also testing delivery through its associates and Uber.
Walmart offers free two-day delivery of orders of more than $35 and has introduced pickup discounts. It’s also increasing the number of order dispensers, called pickup towers, and expanding the payment options for EBT (electronic benefit transfer) customers. The company launched Mobile Express Returns and partnered with Google (GOOGL) to offer voice-based shopping.
All these measures could support the company’s digital sales. Its focus on improving merchandising through SKU rationalizing, value offerings, and the acquisition of in-vogue, fast-growing brands could support its e-commerce sales and solidify its competitive positioning against Amazon (AMZN), Target (TGT), and Costco (COST). Amazon disrupted the grocery space with its Whole Foods acquisition. Target has also stepped up its delivery process through bolt-on acquisitions.