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Walmart (WMT) Looks Appealing on Solid Digitization Endeavors

Zacks Equity Research
·3 mins read

With stay-at-home and social distancing practices emerging as the new norm amid the COVID-19 pandemic, online shopping has reached all new highs. The trend is a boon for a number of retail players, encouraging them to further ramp up omni-channel offerings. Well, Walmart Inc. WMT is leaving no stone unturned to augment capabilities in the e-commerce front. This retail behemoth has been leveraging on capabilities such as home delivery as well as buy online and pick-up in store among others.

This was best exemplified in Walmart’s second-quarter fiscal 2021 results, wherein it reported impressive e-commerce sales numbers. The company’s U.S. e-commerce sales skyrocketed 97% in the second quarter with strength across all channels. Weekly average digital customer count as well as repeat rates grew significantly and boosted e-commerce sales. Markedly, for Walmart U.S., e-commerce sales drove comps by 600 basis points.

Walmart has been lauded for its prudent e-commerce related investments in the recent years. Some of the well-known moves made in this regard include investments in Flipkart, Shopify, ShoeBuy and Moosejaw. In recent developments, Walmart is reportedly teaming up with Microsoft MSFT in a bid to acquire the U.S. operations of TikTok. This potential three-way partnership could be a winning combination in the long run. Apart from these, Walmart is making aggressive efforts to expand in the booming online grocery space.

Markedly, brick-and-mortar stores have an important role to play in the digital upsurge. Walmart’s stores have been adapting themselves to fulfill functions such as buy online pick in store, same-day delivery, curbside pickups etc. In fact, having a large physical store network puts Walmart in a favorable position to compete with e-commerce giant Amazon AMZN.

Speaking of delivery capabilities, the company offers services such as Express Delivery, which helps deliver orders to customers in less than two hours. Walmart’s Pickup program enables customers to place orders online and then pick them up at a store. The company offers Delivery Unlimited membership option at 1,400 U.S. stores. Moreover, Walmart will be launching its Walmart+ membership program, comprising of unlimited free delivery, Scan & Go options and discount offers. Walmart+ will be available in more than 4,700 stores which will include same-day delivery in 2,700 stores. Apart from these, partnerships with Postmates, DoorDash, AxleHire and Roadie have been further supporting Walmart’s delivery capabilities.

Clearly, Walmart offer multiple choices to suit the diverse needs of online shoppers. As at the end of the second quarter, Walmart U.S. had nearly 3,450 pickup locations and 2,730 same-day delivery locations. Apart from Walmart, retail biggie — Target Corporation TGT — has also been ramping up its same-day delivery and in-store pick up services.

All said, Walmart’s well-chalked endeavors to boost online sales are commendable. We expect the company to continue gaining on this front in the forthcoming periods.

Markedly, shares of this Zacks Rank #3 (Hold) company have increased 17.7% in the past three months compared with the industry’s growth of 16.7%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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