Ecommerce Guide

Wal-Mart profits soar, but ecommerce growth is slow

Wal-Mart’s ecommerce growth in the first quarter of 2016 was seven per cent. CEO Doug McMillon thinks that this is not enough.

McMillon said in an earnings conference call that global market value and ecommerce had grown 75 per cent and seven per cent respectively, and that, although they were doing better in the US than globally, neither figure was satisfactory.

He added that the company continued to face challenges in key markets such as the UK (where it trades as Asda), Brazil and China, and that in spite of greatly expanding their ecommerce range, perception continued to lag behind reality.

Wal-Mart continues to make progress on its ecommerce fulfilment centres and operating system, but what differentiates it are the click and collect services that it is introducing in over 40 US markets, its high-quality mobile apps such as the Asda Grocery app, and its Walmart Pay system.

But the seven per cent growth figure is below the eight percent growth reported in the previous quarter, and well below the 20 per cent growth reported in 2014.

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In the US, Wal-Mart has launched a free shipping programme designed to tackle its rival, Amazon Prime, head-on. The subscription service costs $49 (around £33.50) per year, as opposed to $99 (around £68) for Amazon Prime.

Overall, however, Wal-Mart’s profits appear healthy. Revenue climbed from $114.83 billion (£78.69 billion) this time last year to $115.9 billion (£79.42 billion) in 2016 Q1, making it one of the few high street retailers able to withstand the Amazon onslaught. The company has been taking steps to improve its public image, such as raising wages for US workers. It had previously attracted controversy there, as wages were so low that many workers had to apply for welfare benefits, meaning that US taxpayers were effectively subsidising its payroll.

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