Walmart Chases Amazon in Sales

Walmart released sales figures Thursday, May 18th, and the New York Times reported the online portion of the ubiquitous big box store grew by 63 percent in the most recent quarter. Sales figures were provided only for Walmart in the aggregate and not for the online and physical portions of the store separately. The sales total for Walmart in the U.S. was $117.5 billion, which represents a growth of 1.4% overall. Amazon’s sales for 2016 reached almost $136 billion (Abrams).

The Times article points toward the recent acquisition of Jet.com as a source of Walmart’s growth. Walmart acquired both the online store and its founder Marc Lore, who was put into the flow to refresh the retailer’s online presence. Perhaps one of the most noticeable changes for Walmart.com has been the implementation of discounts for products ordered online and picked up at a physical store. In this way, it would seem that Walmart has found a means of turning what is normally touted as their comparative weakness to Amazon’s advantage—no brick-and-mortar locations to diminish profits with operating costs—into a strength.

In August of last year, The Economist wrote of the predicament Walmart had found itself in watching the exploding growth of Amazon. At the time, The Economist cautioned that Walmart’s purchase of Jet would be “unlikely to change the dynamic between the two giants” (them and Amazon). They posited that the allure for Walmart was the algorithm software Jet was using to adjust prices dynamically with customers loading their digital carts and identifying which vendors were closest to minimize shipping costs. The Economist pointed toward the dilemma of integrating online shopping with Walmart’s forte of big-box shopping, which seems to have found a solution as mentioned above (“Boxed-in Unicorn”). Tellingly, Lore’s previous venture, Quidsi, had been purchased by Amazon, as mentioned in The Economist article.

Back in August 2016, Walmart’s most recent figures showed an online sales growth of 12% against 20% for Amazon. These most recent sales figures released clearly show an impressive change for the sales machinery of the company. As this growth has occurred, no doubt pleasing shareholders, Walmart has been implementing a multi-year plan to improve their public image as a workplace. In February 2016, the average hourly wage for full-time employees of Walmart increased to just shy of $13.60/hour with employees hired before the start of 2016 guaranteed a wage of $10.00/hour (“More than One Million”). Another notable event for Walmart this spring has been the three-year anniversary of its Walmart2Walmart money transfer service in the vein of Western Union (“Walmart Slashes Prices”).

Whatever particular strategies Walmart and Lore have employed in increasing sales growth, it would seem to be working. When the next quarterly sales figures are released, we will be able to see if Walmart’s recent sales growth signals a new trajectory.

 

 

www.nytimes.com/2017/05/18/business/walmart-online-sales-jump-63-percent.html

www.economist.com/news/business/21704840-walmarts-acquisition-jetcom-heats-up-its-battle-amazon-boxed-unicorn

news.walmart.com/news-archive/2016/01/20/more-than-one-million-walmart-associates-receive-pay-increase-in-2016

news.walmart.com/2017/04/26/walmart-slashes-prices-again-on-domestic-money-transfers-while-launching-mobile-money-sending-platform

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