3 Reasons Why Walmart Is Seeing Unstoppable E-Commerce Growth
Changes in customer shopping behavior throughout 2020 have accelerated the shift to e-commerce and Walmart was “well positioned to catch and ride these waves,” CEO Doug McMillon said during the retailer's Q3 2021 earnings call, in which Walmart revealed U.S. e-commerce sales swelled 79% in the quarter.
Walmart’s e-commerce and omnichannel penetration continues to rise, accelerating trends by two to three years in some cases, McMillon said.
“We’re convinced that most of the behavior change will persist beyond the pandemic and that our combination of strong stores and emerging digital capabilities will be a winning formula,” McMillon said.
Walmart’s e-commerce was strong in pickup and delivery, as well as direct-to-home with the highest growth coming from marketplace. Sam’s Club’s e-commerce sales jumped 41% with strong demand for direct-to-home delivery and increased club pickup.
Here RIS takes a look at three things helping Walmart keep up with shifting shopper trends and e-commerce demand.
1. “The team is being flexible when it comes to meeting demand.”
McMillon noted Walmart has nearly 2,500 stores able to fulfill online orders. “We can quickly flex this number as the holiday season progresses, to help relieve pressure on our e-commerce fulfillment centers, if necessary,” he noted.
In the last few months, Walmart has been able to open more fulfillment center capacity including staffing out to be able to pick orders and ship from store, John Furner, president and CEO, Walmart U.S., explained. The team has done a good job “using all parts of the supply chain to fulfill our e-commerce demand, which would be reflected in the results that we saw in the quarter of growth of 79%.”
Looking ahead, Walmart is dedicating space in 42 of its regional distribution centers (RDCs) to add “pop-up e-commerce distribution centers” (eDCs) to meet the expected spike in e-commerce orders this holiday season, as well as unexpected peaks in the future.
2. Walmart is adding staff and machine learning to meet demand.
While Walmart struggled in its first quarter with out-of-stocks, the retailer has now doubled the number of people working in its pickup department up to 140,000, Furner said. In addition to the significant increase in staff, Walmart is using machine learning to figure out the best way to put labor against pickup slots, when to pick the slots, and then when to determine what can be filled, he explained, all leading to “nice productivity improvements.”
While Walmart has a time slot system for store pickups, it has also launched its Express two-hour delivery service in 2,700 stores this year, which employs machine learning to fulfill orders so quickly.
“We're really excited about the results in the first three quarters of the year with Express,” said Furner. “So that's been exciting. And then looking forward, every week now we've got literally millions of slots that are open and available for customers to select from, and we'll keep working on the things that we can do in the short-term to gain capacity.”
3. Walmart is launching new services to drive demand.
Walmart has doubled the number of U.S. store associates supporting digital and omni initiatives this year, according to VP and CFO Brett Biggs.
“We’re creating and launching new products and services such as Walmart+, helping us develop deeper relationships with customers.”
In addition to its September Walmart+ launch, the retailer continues to invent new ways to digitally engage shoppers, such as its recent Halloween-themed Camp by Walmart. Just in the last month Walmart launched Walmart Pet Care and Walmart Cookshop. Walmart Pet Care is an omnichannel offering that includes pet sitting and dog walking services through website and mobile app Rover, Walmart PetRx in-store and online pharmacy services, and Walmart Pet Insurance. Walmart Cookshop is a free interactive video hub that features custom content from famous chefs and hosts, including Jamie Oliver, Sofia Vergara, Patti LaBelle and The Pioneer Woman (Ree Drummond). Viewers can tailor dishes and flavors to their own specific tastes, as well as purchase ingredients for Walmart pickup or delivery seamlessly from within each show.
Walmart.com traffic has been robust with solid increases in repeat rates and good momentum in marketplace sales, which grew in triple-digits, Biggs noted.