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Wal-Mart Launches New Venture to Boost e-Commerce Business
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Retail giant Wal-Mart Stores, Inc. (WMT - Free Report) is planning to create a technology-startup incubator in California’s Silicon Valley in order to boost the e-commerce business and enhance online shopping experience.
The venture, called Store No. 8, will function separately from the broader organization. This will help the company’s acquired e-commerce businesses to grow and flourish and not hurt the bottom line in the near term. These initiatives are expected to reshape the retail experience, including virtual reality, autonomous vehicle and drone delivery and personalized shopping.
This set up which will be built in partnership with retail start-ups, venture capitalists and entrepreneurs will remain focused on the development of e-commerce businesses. Marc Lore, Wal-Mart's e-commerce chief, would head the plan.
We note that Lore joined the Bentonville, Arkansas-based company from Jet.com which was acquired by Wal-Mart in August for more than $3 billion. Since then Wal-Mart has acquired three small web retailers with the most recent being the buyout of trendy online clothing seller ModCloth. Although the details of the deal have not been disclosed yet officially, media reports claimed that the buyout was worth $51–$70 million. Post-acquisition, ModCloth will continue to operate its own website as a standalone and complementary brand.
Prior to ModCloth, Wal-Mart bought Moosejaw, an outdoor apparel and gear retailer for $51 million and e-commerce shoe retailer ShoeBuy for $70 million in 2017. This move was aimed at raising the company’s stake in the online business.
It is encouraging that the retail giant is trying every means to compete with e-commerce king Amazon.com Inc. (AMZN - Free Report) . In this regard, the company continues to make huge investments in e-commerce initiatives.
Meanwhile, the company's increased investment in Walmex hints at its efforts to hold substantial market share in Mexico where Amazon is expanding. Bentonville, AR-based Wal-Mart is also aggressively foraying into e-commerce in China with an aim to deliver goods from its stores around the world to consumers within hours.
Wal-Mart has also launched its own mobile payment system called Walmart Pay in all of its 4,500-plus U.S. stores in Jul 2016. This system enables shoppers to pay through its existing smartphone app. This marks another step toward accelerating the company’s online business and making shopping easier and faster.
Wal-Mart is also aggressively trying to get a share of the pie in the online grocery shopping and delivery industry. Recently in Jan 2017, the company started offering free two-day shipping to U.S. shoppers on a minimum order of $35 on over 2 million items. This program will replace Wal-Mart's existing two-day shipping program – Shipping Pass – that charges shoppers an annual membership fee of $49.
It is interesting to note that unlike Amazon Prime (which charges customers $99 a year for two-day shipping) or Wal-Mart’s existing Shipping Pass program, shoppers does not need to pay any membership fee to avail the service. Wal-Mart also expects to expand its online grocery pickup – Walmart Grocery – from the current 600 to roughly 1,200 stores in fiscal 2018.
Further, its valuations are compelling. With a Zacks Rank #3 (Hold), Wal-Mart carries a VGM score of ‘A,’ and a Value and Growth score of ‘A.’ This indicates that there is substantial potential in the stock.
Though the company still faces many headwinds which are likely to impact earnings in the near term, Wal-Mart’s efforts to boost sales and regain investors’ confidence remain impressive.
Share Price Movement
We note that in the past one year, Wal-Mart’sstock gained 3.1%, in comparison to the Zacks categorized Retail-Supermarkets industry’s dip of 0.6%. Further, the company delivered positive earnings surprises in the past six consecutive quarters.
Key Picks
Better-ranked stocks in the retail sector include The Children's Place, Inc. (PLCE - Free Report) and Kate Spade & Company .
While Children’s Place has an expected long-term earnings growth of 10.3%, Kate Spade has an expected earnings growth of 28.3% for the next three to five years.
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With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
Image: Bigstock
Wal-Mart Launches New Venture to Boost e-Commerce Business
Retail giant Wal-Mart Stores, Inc. (WMT - Free Report) is planning to create a technology-startup incubator in California’s Silicon Valley in order to boost the e-commerce business and enhance online shopping experience.
The venture, called Store No. 8, will function separately from the broader organization. This will help the company’s acquired e-commerce businesses to grow and flourish and not hurt the bottom line in the near term. These initiatives are expected to reshape the retail experience, including virtual reality, autonomous vehicle and drone delivery and personalized shopping.
This set up which will be built in partnership with retail start-ups, venture capitalists and entrepreneurs will remain focused on the development of e-commerce businesses. Marc Lore, Wal-Mart's e-commerce chief, would head the plan.
We note that Lore joined the Bentonville, Arkansas-based company from Jet.com which was acquired by Wal-Mart in August for more than $3 billion. Since then Wal-Mart has acquired three small web retailers with the most recent being the buyout of trendy online clothing seller ModCloth. Although the details of the deal have not been disclosed yet officially, media reports claimed that the buyout was worth $51–$70 million. Post-acquisition, ModCloth will continue to operate its own website as a standalone and complementary brand.
Prior to ModCloth, Wal-Mart bought Moosejaw, an outdoor apparel and gear retailer for $51 million and e-commerce shoe retailer ShoeBuy for $70 million in 2017. This move was aimed at raising the company’s stake in the online business.
It is encouraging that the retail giant is trying every means to compete with e-commerce king Amazon.com Inc. (AMZN - Free Report) . In this regard, the company continues to make huge investments in e-commerce initiatives.
Meanwhile, the company's increased investment in Walmex hints at its efforts to hold substantial market share in Mexico where Amazon is expanding. Bentonville, AR-based Wal-Mart is also aggressively foraying into e-commerce in China with an aim to deliver goods from its stores around the world to consumers within hours.
Wal-Mart has also launched its own mobile payment system called Walmart Pay in all of its 4,500-plus U.S. stores in Jul 2016. This system enables shoppers to pay through its existing smartphone app. This marks another step toward accelerating the company’s online business and making shopping easier and faster.
Wal-Mart is also aggressively trying to get a share of the pie in the online grocery shopping and delivery industry. Recently in Jan 2017, the company started offering free two-day shipping to U.S. shoppers on a minimum order of $35 on over 2 million items. This program will replace Wal-Mart's existing two-day shipping program – Shipping Pass – that charges shoppers an annual membership fee of $49.
It is interesting to note that unlike Amazon Prime (which charges customers $99 a year for two-day shipping) or Wal-Mart’s existing Shipping Pass program, shoppers does not need to pay any membership fee to avail the service. Wal-Mart also expects to expand its online grocery pickup – Walmart Grocery – from the current 600 to roughly 1,200 stores in fiscal 2018.
Further, its valuations are compelling. With a Zacks Rank #3 (Hold), Wal-Mart carries a VGM score of ‘A,’ and a Value and Growth score of ‘A.’ This indicates that there is substantial potential in the stock.
Though the company still faces many headwinds which are likely to impact earnings in the near term, Wal-Mart’s efforts to boost sales and regain investors’ confidence remain impressive.
Share Price Movement
We note that in the past one year, Wal-Mart’sstock gained 3.1%, in comparison to the Zacks categorized Retail-Supermarkets industry’s dip of 0.6%. Further, the company delivered positive earnings surprises in the past six consecutive quarters.
Key Picks
Better-ranked stocks in the retail sector include The Children's Place, Inc. (PLCE - Free Report) and Kate Spade & Company .
Both Children’s Place and Kate Spade sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
While Children’s Place has an expected long-term earnings growth of 10.3%, Kate Spade has an expected earnings growth of 28.3% for the next three to five years.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>