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Walmart (WMT) to Sustain Steady Show on Online Strength

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Robust initiatives to strengthen e-commerce and the store business have kept Walmart Inc. (WMT - Free Report) on firm grounds, especially amid the rising competition from Amazon (AMZN - Free Report) . While the online giant’s growing dominance has kept many retailers on their toes, its concerted efforts to enhance its online game have helped the big-box retailer stay quite steady in the retail arena.

These factors, which have long been driving Walmart’s performance, have also instilled investors’ confidence in this Zacks Rank #2 (Buy) stock. Markedly, the world’s largest retailer has seen its shares surge almost 30% in the past year, outpacing the industry’s growth of 27%.

Walmart’s Splendid E-Commerce Endeavors

Walmart is trying every means to evolve with the changing consumer environment to compete with brick-and-mortar rivals and e-commerce king Amazon. In this regard, the company has been taking several e-commerce initiatives, including buyouts, alliances, and improved delivery and payment systems. The company’s contracts with Green Dot and Microsoft; buyouts of ShoeBuy, Moosejaw, Bonobos, ModCloth and; and deal with Lord and Taylor, among others, underscore its intention to build an impressive digital brand portfolio.

Further, the buyout of a 77% stake in Flipkart is likely to bolster Walmart’s e-commerce sales, though the deal is expected to hurt the bottom line in fiscal 2020. Apart from this, the company’s efforts to improve its website, and enhance the check-out process along with Walmart Pay mobile payment system and Mobile Express Returns program highlight its focus on accelerating the online business. Additionally, Walmart is making aggressive efforts to expand in the booming online grocery space, which has been a major contributor to e-commerce sales for quite some time now.

To this end, Walmart unveiled the Delivery Unlimited membership option for 1,400 U.S. stores during the third quarter of fiscal 2020. Also, it launched Walmart InHome Delivery across three markets and same-day pickup at all of Mexico’s Sam’s Club locations. Prior to this, the company joined hands with Point Pickup, Skipcart, AxleHire and Roadie. These collaborations are expected to strengthen its online grocery delivery service in four states, with plans of greater expansions in the days ahead.

Other than this, deals with Postmates and DoorDash along with the acquisition of Parcel reflect the company’s focus on enhancing grocery sales.

Further, the Walmart Pickup program enables customers to place orders online and pick them up at a store for free. Notably, by the end of the third quarter, Walmart U.S. had more than 3,000 pickup locations and more than 1,400 same-day grocery delivery locations. Backed by such endeavors, U.S. e-commerce sales surged 41% in the third quarter of fiscal 2020 on the back of strength in online grocery. These factors keep management optimistic about achieving 35% of U.S. e-commerce sales growth in fiscal 2020. Walmart expects to have roughly 3,100 grocery pickup locations and about 1,600 grocery delivery locations by the end of fiscal 2020.

Wrapping Up

Other than the aforementioned e-commerce efforts, the company has been undertaking several moves to enhance merchandise assortments. Further, it is on track with store remodeling to upgrade them with advanced in-store and digital innovation. Additionally, Walmart is gaining from its compelling pricing strategy, which helps it draw customers. Well, such trends drove the company in third-quarter fiscal 2020, wherein earnings beat the Zacks Consensus Estimate for the seventh straight time. Further, this marked Walmart’s 21st consecutive quarter of U.S. comparable store sales growth.

All said, we expect Walmart to maintain its stellar show this year as well.  

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