The battle between the top two retailers has never been more digital, and by all accounts, that shift will only increase.
“If you look at our eCommerce business today, it’s an $80 billion business and still growing,” Walmart Chief Financial Officer John Rainey told investors on the company’s Q4 earnings call earlier this week in which the retail giant reported a 17% increase in its eCommerce business.
“We have a lot of opportunity there going forward,” Rainey added, “and while we’ve always been known for price, we’re also now being known for convenience.”
Beyond price and convenience, there’s another huge component shaping the ongoing battle between Walmart and Amazon — and countless other retailers and brands — that are all vying for consumers’ attention and money: product.
While the dominant retail story of 2022 was about having too much inventory in the wake of not having enough merchandise for a lot of the earlier COVID era, the supply chain woes of yore appear to have subsided. As a result, retailers are once again, gradually, focusing on meeting the shifting needs of consumers.
“Customers are still spending money,” Walmart CEO Doug McMillon said on the call, but rather than wantonly buying discretionary general merchandise items, he characterized their current buying habits as more “choiceful, discerning, thoughtful.”
With that in mind, product mix — or having the right stuff on the shelves or in the fulfillment center, so to speak — is even more critical. On the broadest level of digital marketplaces, this is measured in SKUs (stock-keeping units) as in, the total number of items a particular retailer has to sell, both their own and those of increasingly important third-party sellers.
“If I had to say, the (Walmart.com) marketplace is perhaps the linchpin of (our digital initiatives) because that gives us the ability to sell third-party merchandise as well as first party,” Rainey said, noting that Walmart now has over 400 million SKUs on its marketplace, up from 370 Million in Q3.
That is important, he explained, on many levels as it not only serves to satisfy consumers but also feeds a number of other important businesses along the way.
“As we get more assortment on the marketplace, we get more eyeballs coming to our website and that makes advertisers want to spend money there with the larger audience,” he added, in a quarter where Walmart’s new ad business was up 41%.
While Amazon did not respond to an email request for an update as to its current SKU count, its Prime subscriber base is known to be exponentially larger than what Walmart+ has been able to amass in its first few years.
That said, while the subscription battle is still deeply lopsided, it is not going away, especially at a time when same-hour fulfillment in-store and at the curbside is on the rise as young, digitally savvy consumers want their goods, at the best price, as fast as possible.
Walmart+ members recognize our strength for convenience even more than the average customer,” McMillon said, an insight that reflected in recent earnings results as well as PYMNTS’ data which show the Arkansas-based retailer had shown some increased traction and market penetration with younger consumers.
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