What's Walmart's Latest Strategy To Boost E-Commerce Growth?

Walmart Inc. (NYSE:WMT) is keeping eyes fixed on augmenting e-commerce business, evident from the latest venture to combine Sam's Club with Instacart for providing same day delivery services. The news came in a few days after sources revealed that the company will launch an online shopping vertical offering furniture and home decor products. With such efforts listed in its e-commerce expansion plans, Walmart seems well placed to lock horns with Amazon.com (NASDAQ:AMZN) and accelerate online sales growth.

That said, let’s take a closer look at the aspects associated with these deals and how they will benefit this Zacks Rank #2 (Buy) company.

Sam's Club-Instacart to Strengthen Delivery Services

Sam's Club is a warehouse chain and a vital unit of Walmart’s business. The unit is expected to witness substantial boost in the sale of its food products and everyday essentials through the partnership with Instacart. Per the deal, Sam’s Club customers can get their orders delivered at their doorstep within an hour’s time.

With Instacart’s fame in same-day delivery services, shopping with Sam’s Club is expected to be all the more enticing for customers. This is likely to drive Walmart’s online and app-based sales. Further, management stated that Sam’s Club will continue expanding same-day delivery services in 2018 across the United States. As of now, the unit will offer same-day delivery benefits in Austin, St. Louis and Dallas-Fort Worth.

Well, the deal is quite a bonus for Instacart’s expanding business, offering it the opportunity to add many of Sam’s Club’s valued brands to its portfolio and widen customer base. Moreover, Instacart members will now be able to avail Sam’s Club’s bulk shopping choices and its signature savings.

Speaking of same-day delivery services, Walmart’s efforts to enrich consumers’ experiences by providing easy shopping methods and seamless deliveries are quite praiseworthy. In October 2017, the company acquired a delivery startup, Parcel, Inc., which is a last-mile delivery service and specializes in same-day delivery for perishable and non-perishable products. Also, the company has been testing same-day deliveries with Deliv for quite some time now.

Additionally, the company’s Walmart Pickup program enables customers to place orders online and pick them up at stores for free. In earlier developments, Walmart partnered with ride hailing services — Uber and Lyft — for speedy online grocery deliveries.

Other Vital E-Commerce Initiatives

Apart from strengthening grocery sales, Walmart has been striving to increase the sales of furniture and home décor products. To this end, the company launched a new online platform. The site will include a wide range of curated furniture collections to suit a variety of customer needs. Further, Walmart has been expanding in the e-commerce space through buyouts and strategic alliances.

Recently, the company inked a deal with Rakuten — a leading Japanese e-commerce firm. Per the deal, the companies will collaborate to sell online groceries in Japan as well as e-books and audio books in the United States. Apart from this, Walmart’s buyouts of ShoeBuy, Moosejaw, Bonobos, ModCloth and Jet.com as well as deals with Lord and Taylor underscore the company’s plan to build an impressive digital brand portfolio.

All said, Walmart’s constant expansion efforts and strong e-commerce business have made the stock a preferred pick for investors. Shares of this retail giant have soared almost 31.3% over the past year compared with the industry’s rally of 24.5%. Moreover, we expect that the company’s latest initiatives will widen its presence and offer improved services in the online realm. This will aid the company reach greater highs in the forthcoming periods.

Wrapping It Up

Driven by such efforts, Walmart’s U.S. e-commerce sales soared 23% in the fourth quarter, while the pace of e-commerce growth marked a slowdown from the previous quarter’s surge of 50%. Although this was a jolt to investors, it must be noted that Jet.com’s buyout boosted the company’s e-commerce sales in 2017, when it was acquired. A slowdown in e-commerce sales was witnessed in the fourth quarter, as the company factored in Jet.com's sales in the year-ago quarter.

Nevertheless, Walmart remains committed toward fortifying its e-commerce business to accelerate growth. The company’s efforts to enhance delivery services and expand product categories resonate well with its strategy of growing in the online space. We believe that such strategic endeavors will help Walmart offer multiple choices to online shoppers amid increasing competition.

Looking for More Promising Bets? Check These Retail Stocks

Investors interested in the same sector may also consider companies such as Ross Stores, Inc. (NASDAQ:ROST) and Dollar Tree, Inc. (NASDAQ:DLTR) , both carrying a Zack Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Ross Stores came up with an average positive earnings surprise of 5.5% in the trailing four quarters. It has a long-term earnings growth rate of 10%.

Dollar Tree pulled off an average positive earnings surprise of 7.3% in the trailing four quarters. Also, it has a long-term earnings growth rate of 14.5%.

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