The digital shift is alive and well at Walmart. The largest U.S. retailer posted its third-quarter earnings on Tuesday morning (Nov. 17) with another quarterly spike in eCommerce sales and, perhaps more importantly, an increase in profit from its overhead-heavy digital sales effort.
“With the outbreak of COVID-19, the retail world hit fast-forward in our ability to adapt quickly, [which] has led to crucial changes in customer behavior [that] have accelerated the shift to eCommerce and digital,” said CEO Doug McMillon on the earnings call. “We were well-positioned to catch and ride these waves given our previous work and investments. Our eCommerce and omnichannel penetration continues to rise, accelerating trends of two to three years in some cases. We're convinced that most of the behavior change will persist beyond the pandemic, and that our combination of strong stores and emerging digital capabilities will be a winning formula.”
The company’s eCommerce sales rose 79 percent compared to 2019 and contributed 570 basis points to comp sales. In-store comp sales were up 6.4 percent and overall revenue rose to $134 billion, a 5.2 percent increase over last year.
The company’s earnings call was light on details about its Walmart+ subscription service that launched late in Q3. PYMNTS research shows that roughly 17 percent of U.S. consumers report having a Walmart+ membership, per a survey conducted just a bit more than a month after its launch. That compares to 68 percent of consumers who report belonging to Amazon Prime, a program that launched in February 2005 and now counts 150 million members globally. Of that 17 percent with Walmart+, 15 percent are consumers who already had an Amazon Prime account and about 2 percent of them did not.
However, Walmart did not release any details about the service other than to say it had so far accomplished what the company had hoped, in terms of being a positive customer strategy.
“I do think Walmart+ can be helpful in a lot of ways over time,” McMillon said on the earnings call. “And the information will help our ability to personalize for customers, and I think we'll be able to serve them better. And both sides, both the stores and eCommerce, will come to life in a way that helps make Walmart+ even stronger. In particular, the ability to leverage costs to pick efficiently, obviously getting things into one box as much as possible, getting shipping efficiencies, all those kinds of things are going to generate a sustainable business as well as [boost] eCommerce as a channel over time.”
McMillon also waxed positive on the holiday season, again without specific numbers at this point. Walmart has been conducting its own Black Friday-style sales events and also counterprogrammed Amazon’s Prime Day with its own event. McMillon seemed to subscribe more to the emotional need for holiday gifting than to a business case for a healthy Q4 in terms of consumer spending.
“Now let's keep in mind, we've got multiple markets and a lot of different scenarios, but there are some common trends,” he said. “You know people are at home more, they're eating at home more, and they've all been through a difficult year. …. In my family, while it'd be a smaller group, we're really looking forward to Thanksgiving and Christmas and New Year’s and some sense of joy and normalcy. I think we'll see that play out as it relates to consumption patterns in the U.S. and beyond.”