Is Walmart’s eCommerce Strategy Paying Off?

There’s an ongoing clash of the Titans in the US. And from what Walmart announced last week, its eCommerce strategy appears to be paying off as it continues to go head-to-head with Amazon.

Walmart reported a 63% jump in year-over-year US online sales for the quarter ending April 28. The company showed it was getting its head around online channels. But what aspect of the company’s eCommerce strategy, if any, accounts for this boost?

Building for eCommerce

Walmart’s strategy in the last two years has included the acquisition of online properties, most notably Jet.com. The bulk online retailer provides discounts based on order size and proximity to warehouses.

The company followed this up with purchases of ShoeBuy.com, Moosejaw and ModCloth, all eCommerce apparel retailers.

Analysts have pointed out that the Jet.com purchase itself is not a factor in the recent results.

What may be more relevant to Walmart’s continued online growth was its order fulfillment policy re-designed to hit Amazon where it lives. Walmart now offers free two-day shipping on orders of $35 or more, a bonus formerly reserved to members of its ShippingPass program.

Walmart also launched a program to offer discounts for online orders that customers opted to pick up in stores. The Pickup Discount program included 10,000 items at launch, but the retailer is expected to expand that to one million items by the end of June.

Finally, and what has probably driven eCommerce growth more than any other factor is the number of products Walmart now offers online. Last year, the online catalog included 10 million items. Now it’s 50 million.

“The majority of our growth is and will be organic,” said CEO Doug McMillon, according to CNBC. “The acquisitions are helping us speed some things up.”

eCommerce Strategy Suits Omnichannel, Less Inventory

The company’s eCommerce strategy could be seen more as an omnichannel strategy. The Pickup Discount program not only cuts the price on final mile delivery.

But it also makes Walmart’s historic investment in retail locations a part of its online strategy. Meanwhile, the discount incentive draws customers into physical locations, opening the opportunity for impromptu purchases.

This convergence of channel strategies dovetails with another highlight of Walmart’s first quarter announcement. While US stores saw a 1.5% growth in comparable traffic, it did so with a 7% comparable inventory decrease.Walmart’s net US sales grew by 2.9%.

All of this happened as Walmart grew its net US sales by 2.9%.

So, while Walmart ratcheted up its eCommerce strategy, it also got more efficiency out of its in-store operations. Specifically, the company was able to grow overall sales with less stock. And at the same time, it tied its eCommerce channel to its brick-and-mortar stores.