Walmart announced earnings this week, and while the company continues to show strength in store sales, eCommerce was the star of the earnings report.
Store sales over last year grew 1.4% last quarter with a traffic increase of 1.5% over the same period last year. This report is the 11th consecutive quarter of positive sales growth and 10th consecutive quarter of traffic growth.
While other retailers struggle with growth in an eCommerce changing world, Walmart continues to show strength in physical store sales. It does this despite increased competition from niche discounters like Aldi and Dollar Stores.
ECOMMERCE GROWTH CONTINUES TO SURPRISE OBSERVERS
In Q3 2016, Walmart’s eCommerce growth was 20%. In Q4 2016, it grew to 29%, but for Q1 2017, Walmart announced eCommerce sales growth of 63%.
That far exceeds Walmart’s growth during the holiday season, so the purchase of Jet.com and other smaller eCommerce stores is showing a return on investment.
Other initiatives such as free 2-day shipping without requiring membership and adding 3rd party Walmart Marketplace sellers played some role in this growth as well.
WALMART NOT A THREAT TO AMAZON (YET?)
But, let’s put this in a bit of perspective to Amazon. Walmart’s total revenue for Q1 was $117.5 billion of which about 4% ($4.7 billion) is online sales.
Compare this to Amazon’s total revenues last quarter of $35.71 billion of which AWS represents about $3.66 billion.
AWS is growing rapidly with a 42% revenue jump in the last quarter, but one can see that Walmart’s eCommerce revenues are just above Amazon’s AWS revenues.
In comparison, Walmart’s eCommerce revenues are growing but only represent about 14% of Amazon’s non-AWS revenues. So there is a long road ahead to try to catch up.
WHAT DOES THIS MEAN FOR MARKETPLACE SELLERS?
Amazon per unit sales are almost evenly split between ‘sold by Amazon’ products and third party sellers. About 17% of total Amazon revenues are from third-party seller fees.
Walmart did not break down third-party seller fees. But one can assume that since the service is still very new, the impact on revenues is marginal.
However, with Walmart slowing physical store openings to concentrate on eCommerce, and with eCommerce growth well beyond most expectations, Walmart may become the next big marketplace.
As the summer months approach and online retailers plan for the holiday shopping season, the Walmart Marketplace should be a consideration for holiday sales.
Walmart may not catch up to Amazon anytime soon, but they are becoming a major force in eCommerce.
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