Due to its slow start and late entry, Wal-Mart's e-commerce business has not performed very well. Compared with Amazon, it is at a disadvantage. However, the financial report pointed out that the development of Wal-Mart's e-commerce business is steadily improving, and the data in terms of traffic, sellers, buyers, etc. have all increased compared to before.
Q3 revenue exceeds expectations, Wal-Mart e-commerce grows steadily
Last week , Wal-Mart announced its financial results for the third quarter of 2022 , pointing out that due to the strong demand for groceries, coupled with the blessing of the US back-to-school season and online promotions, the quarter’s revenue reached 152.81 billion US dollars, an increase of 8.7% year-on-year. That compared with expectations for $147.75 billion .
After the financial report was announced, Wal-Mart's stock price rose in a straight line, with an increase of nearly 5%.
Although revenue exceeded expectations , its operating profit in the third quarter fell by 53.5% year-on-year to US$2.7 billion , with a net loss of US$1.77 billion, compared with a net profit of US$3.13 billion in the same period last year . It can be seen that Wal-Mart is also inevitably affected by the market downturn. .
Wal-Mart Chief Financial Officer John David Rainey said that high inflation has left Americans' wallets stretched , and consumers are looking forward to promotions more than ever . At the same time, they are reducing spending on clothing and home furnishing.
However, during the quarter , Wal-Mart's inventory glut problem eased, with inventory increasing by only 13 %, down from 26% in the second quarter and 32% in the first quarter , with clothing and electronics inventory falling the most.
The most noteworthy thing in this financial report is the performance of its e-commerce business sector.
The financial report shows that in the third quarter, Wal-Mart’s U.S. e-commerce sales increased by 16% year-on-year, and the cumulative growth in two years was 24%.
The data did not disclose other details of the growth of the e-commerce sector in detail, but Wal-Mart's efforts to launch the online market are not shy.
Competing in the e-commerce market, Walmart catches up with Amazon
When it comes to Wal-Mart, it is inevitable to mention its "chasing after me" with Amazon.
This year is the ninth year in a row that Wal-Mart has been ranked as the top 1 of the world's top 500 companies, while Amazon's ranking jumped to TOP2 this year, second only to Wal-Mart. Some analysts said that according to Amazon's current business growth rate, it may overtake Wal-Mart within two years.
In the physical retail sector, Wal-Mart has a decisive advantage, but due to the late start of the e-commerce sector, the market dividend has almost been divided by Amazon and others, so it is still at a disadvantage.
Statista data pointed out that Amazon accounts for 37.8% of the US e-commerce market , while Walmart only has 6.3% .
According to the latest Jungle Scout survey , 73% of Americans choose Amazon when shopping online , while only 43% choose Walmart .
However, Wal-Mart has not given up on this slump, and is still working hard in many ways, intending to occupy more e-commerce market share.
For example, in the member development sector, Walmart has cut the cost of Walmart+ members by half , and has held member promotions many times to stimulate the growth and consumption of new member users.
Jason Goldberg, chief commercial officer at Publicis, said Walmart and Amazon compete with customers at a wall, and Amazon Prime may experience higher churn when Walmart cuts prices .
During the third-quarter earnings call, Walmart CEO Doug McMillon also said, Wrgiruxqnhi Its growth is "improving," with an estimated 16 million members in its Walmart+ membership subscription program. The total number of Plus members is up about 9% from last year, and penetration continues to climb.
At the same time, according to the financial report, the membership income in this quarter increased by 8%, and the number of members reached a record high .
But in Jungle Scout 's latest survey , 57 percent of respondents had an Amazon Prime membership, but only 31 percent had Walmart Plus.
In terms of sellers, both companies currently rely heavily on third-party sellers for their e-commerce businesses , with Amazon accounting for 82% and Walmart accounting for nearly 79%. According to the data, there are currently about 6.3 million third-party sellers on Amazon , while Wal-Mart has only 150,000 . However , according to Marketplace Pulse , nearly 1,000 new sellers join the Walmart marketplace every week, which is 4 times higher than before and almost equal to the speed of new sellers in the Amazon US marketplace .
In terms of product prices, Wal-Mart has an advantage , or due to the impact of inventory, Wal-Mart's low-price promotions are also more frequent than Amazon. In addition, the user stickiness on Walmart is temporarily ahead of Amazon.
The competition between Wal-Mart and Amazon is intensifying, spreading from offline to online. According to the current financial report for the first half of the year, although Amazon 's e-commerce sales ( $50.9 billion vs. $19.2 billion) and subscription sales ($8.7 billion vs. $1.5 billion) are still significantly ahead of Wal-Mart , the growth trend is opposite. It is reported that Amazon's e-commerce sales fell by 4.61%, while Walmart increased by 11.98% .
The sales promotion methods are different, and the peak season of the US retail giants begins
The performance of the US retail giants in the last quarter was mixed. Amazon and Wal-Mart’s revenue exceeded expectations, while Target’s revenue plummeted. Net income fell by 49.1% year-on-year , and profits plummeted by 52%.
Regardless of their performance, these giants have lowered their revenue forecasts for the fourth quarter. In the case of a sluggish market, how will they achieve more impressive results in the upcoming holiday sales season?
As an important promotional period during peak sales, "Black Friday" has always been a must for sellers and retailers.
Mastercard Spending Pulse predicts that Black Friday retail sales in the U.S. will increase by 15% this year compared to last year . U.S. consumers spent $ 10.7 billion on Cyber Monday last year, and Adobe expects it to grow 5.1 percent this year . ICSC expects U.S. consumers to spend $ 125 billion on Thanksgiving this year , up 10 percent from a year earlier .
Recently, the American retailer Target announced that it will hold the largest "Black Friday" week promotion in history from November 20th to 26th both online and in physical stores.
Enjoy the best deals of up to 50% off on electronics, toys, kitchen gadgets and more during the event .
When it comes to returns, Target offers a "Holiday Price Match Guarantee" that offers free returns on most new, unopened items within 90 days of purchase.
The "90-day free return" strategy was also launched by Wal-Mart in this year's holiday sales season. In addition to "Black Friday", Wal-Mart is also keeping an eye on "Cyber One". Compared with the "Black Friday" of omni-channel promotion, "Cyber One" focuses more on online shopping. So some media joked that "Black Friday" is Wal-Mart's day, and "Cyber One" is Amazon's day.
However, a few days ago, Wal-Mart launched a "Monday Case" activity to create topics to attract consumers to go to Wal-Mart for online shopping on "Cyber Monday" . In addition , throughout November , Wal-Mart carried out "Black Friday Cyber Monday" on YouTube . Related publicity .
Amazon has already set the specific time for this year’s “Black Friday Cyber Monday” promotion, and the discounts are not small. Depending on the category, the discount can be as low as 20% or as high as 65%. In addition, it also announced the extension of the return time, which will be extended to January 31, 2023 for most of the goods purchased between October 11 and December 25 this year .
Eliminating revenue pressure and easing inventory pressure may be the biggest expectation of most retailers for the fourth quarter of this year, but it also means that retailers' peak season battles this year will be more intense.
But the latest survey by GO Banking Rates shows that Amazon is still the most popular online shopping channel for Americans this holiday season due to its richer product categories, with nearly half ( 48% ) of Americans choosing Amazon for online shopping .
Compared with other platforms, most of the sellers still get together on Amazon, and they are gearing up early to hope to usher in a positive sales result. Although the dream of a big explosion in the peak season may not be realized, a small sales peak may still be expected.