Walmart’s latest results show continued momentum in digital commerce and the buildout of its online marketplace.
The company said on Tuesday (Feb. 20) that overall eCommerce sales surged 23% in the quarter, and eCommerce net sales globally represented about 18% of the net sales logged in the quarter, which stood at $173.4 billion.
Supplemental materials released by Walmart noted that in the U.S., comp sales were up 4% with strength in grocery and health and wellness, partially offset by softness in general merchandise. The company said the number of transactions, excluding fuel, were up 4.3%. Grocery was up in the mid-single-digit percentage points, according to company materials, while the health and wellness category was up in the mid-teens percentage points. General merchandise sales declined in the low single-digit range, due in part to softness in home goods and seasonal items, and toys.
The company spotlighted that eCommerce strength represented double-digit increases in store-fulfilled pickup and delivery. Walmart also saw a 20% boost in marketplace sellers and a 22% increase in Walmart Connect advertising sales.
During the conference call with analysts, CEO Doug McMillon said that during 2023, the company passed the $100 billion mark for eCommerce sales for the first time and added that private brand penetration of its sales has been gaining ground.
Walmart’s future, he said, lies with omnichannel efforts, “where we simultaneously strengthen our stores and clubs and build a more compelling eCommerce business.” The remodeling of more than 900 stores globally across the company’s portfolio proceeds apace, he said, including 650 stores in the U.S.
With a nod to the marketplace operations, McMillon said that “the combination of marketplace and the commissions that go with it, fulfillment services, membership, advertising, and our smaller, but fast growing data modernization business, enable us to grow our bottom line faster than our top line.” The marketplace, he said, “is an engine for our business.”
McMillion said Walmart Plus members were spending nearly twice the amount spent by non-members.
CFO John D. Rainey said on the call that international eCommerce sales were up by 44%, reaching a penetration level of 25%, while in the U.S., store-fulfilled delivery sales were up by nearly 50% in the most recent quarter, reaching a $2 billion monthly run rate.
“Delivery has been a key source of share gain among upper income households and is also the most productive channel for acquiring Walmart Plus members,” said the CFO. Rainey said the deal to buy Vizio, announced on Tuesday, will help underpin gains in Walmart U.S. Connect, which grew 22%, with more than 50% growth from marketplace sellers (30% of whom are using Walmart’s fulfilment services).
Looking ahead, during the current fiscal year (which is fiscal year 2025), Walmart anticipates that net sales on a constant currency basis will be up between 3% to 4%, and operating income growth will outpace sales growth.
Said Rainey of the transaction growth logged in the most recent quarter, “we’re seeing more customers — and we’re seeing them more often. And we’re seeing a lot of new customers.”
As McMillon told analysts on the call, “marketplace and advertising are key to profitability growth.”
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