In Depth

Walmart Mobilizing Mobile Efforts As Sales Lag

When it comes to mobile transactions, the results of Walmart’s first quarter earnings results — which were announced Tuesday (May 19) — show why the retail giant is investing more in mobile, but more importantly, why it’s investing more in mobile in China.

Walmart has seen significant mobile traffic growth, which was up 100 percent in Q1, when compared with the year prior, and mobile commerce conversions are also up. But when it comes to breaking out how much of its online commerce comes specifically from mobile, executives were mum during the company’s prepared remarks about the quarter about just how much that conversion rate was.

At least when it comes to its U.S. business. In China, however, the mobile story for Walmart is a different story. For its eCommerce business Yihaodian, Walmart said its conversion rate improved by 100 basis points, when compared to 2014’s Q1, and said that mobile now accounts for more than 40 percent of all online orders. In general, Walmart’s worldwide eCommerce sales grew 17 percent in Q1.

“We’re confident we’ll continue to deliver growth in China,” said David Cheesewright, President and CEO of Walmart International, during the earnings call. “Part of this growth will come from the planned opening of 33 stores and clubs this year, with expansion focused in the southern regions where we have strong market presence. Additionally, we aim to provide better services and widen our customer reach through greater expansion of our omni-channel platforms, including online and mobile.”

That focus on mobile is likely to be through partner Ant Financial, which will bring its Alipay mobile payment option to Walmart’s registers. Walmart announced last week (May 14) that is has inked a deal with Alibaba to offer its customers the ability to use the Alipay mobile payment option across 25 of its southern China stores. The race to win over China’s mobile payments audience has been a fierce one among retailers, in large part because of the fact that China has high smartphone penetration and a massive population who embraces mobile payments as their preferred payment method.

While that would position Walmart against Apple in China — at least if Apple Pay ever makes its way as a viable mobile payment option in the country — when it comes to stateside competition, Walmart is looking to build its eCommerce presence by rolling out its own loyalty subscription service that undercuts Amazon’s model by offering quick shipping at a cheaper rate.

The retailer announced last week (May 13) that it’s gearing up to launch its own version of Amazon Prime. Walmart has reportedly codenamed the new service “Tahoe,” which is its new shipping subscription service that’s in the works ($50 a year).

The service will ship products to shoppers in three days or fewer, and will be available for more than 1 million products. For now, however, Walmart’s Tahoe is available by invite only. Reports said that Tahoe was initially poised for launch ahead of last year’s gift-giving season, but delays have pushed the full release date to somewhere around early summer this year.

Walmart is also looking to reduce checkout friction on its website, which the company said it’s doing with the rollout of a more simplified checkout process — based on the global technology platform known as Pangea.

And that’s where mobile will play a bigger role for Walmart’s overall commerce strategy, according to Doug McMillon, Walmart Stores’ President and CEO. Walmart plans to expand its global technology offerings on a global scale so its eCommerce presence can be seen across more regions.

“As we improve the experience in our stores, we continue to invest to deliver a stronger mobile and eCommerce experience. An important part of [the Pangea] platform is that it delivers a better experience on mobile devices. Mobile is increasingly the driver of our eCommerce business,” he said.

Walmart also hopes to expand its mobile shopping figures with its new partnership with Tango and Alibaba with the launch of Tango Shop last week (May 12). This partnership will extend Tango’s reach into the mobile shopping side as its 300-some million users can now browse and shop on Walmart.com or AliExpress via the Tango shopping app. This deal not only allows Tango a path into mobile commerce, it allows Walmart and Alibaba a share at another group of active mobile users to boost their mobile commerce.

As Walmart continues to make investments toward its digital, mobile and eCommerce strategies, the retailer announced it plans to continue “moving on a lot of fronts and picking up some speed.” While its executive team didn’t go into detail about what that specifically entails, the amount of the company’s focus during the past few quarters on mobile commerce shows that the company has recognized the value in putting more money toward mobile in a time when storefronts are shrinking, foot traffic is dwindling and sales are struggling to keep up in the competitive retail ecosystem.

And in China, the push is even greater to bring a more seamless mobile solution. But what’s unique in China for Walmart is that the retailer plans to focus on its mobile payment experience — but with a bricks-and-mortar focus.

That just might be what the major retailer needs in a time when earnings were down as its revenue dipped .1 percent, year over year, to $114.8 billion. Overall, in the U.S., net sales were up 3.5 percent to $70.2 billion, but operating income dipped by 6.8 percent to $4.6 billion. Internationally, however, Walmart is seeing worse sales, as net sales for the quarter were down 6.6 percent to $30.3 million. And in terms of profit, Walmart saw a 7 percent decrease, to $3.34 billion.

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