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article imageWalmart shows strong earnings and will speed up digital services

By Tim Sandle     Aug 17, 2019 in Business
Walmart has increased its full-year guidance after notifying the stock market of second-quarter earnings which exceeded market analysts’ expectations. Much of this was driven by a growth in online sales, signalling further transformation to come.
Walmart's news marked the 20th consecutive quarter of sales gains in the U.S. for Walmart, leading to 5 percent sales growth, CNBC reports. The most interesting factor, helping to fuel this growth, were e-commerce sales surging by 37 percent. Walmart are attributing the success of its online business due to its roll-out of next-day delivery, which now reaches close to 75 percent of the U.S. population.
With these figures, Walmart expanded its grocery delivery locations to more than 1,100 in the second quarter; the company also increased its grocery pickup locations to more than 2,700 sites. Reflecting on this, Eli Finkelshteyn, CEO and founder of Constructor.io, tells Digital Journal the strong contribution made to earnings from the company’s successful digital initiatives and their solid online grocery options, which have been far more successful than Amazon’s attempts in this space.
Finkelshteyn says: "Through both general increases in online groceries, where Walmart has been doing very well, along with the Prime Day bump that our data shows most retailers benefited from, Walmart had a great quarter."
He see targeting further online growth as essential, looking at a key U.S. demographic: "As they continue to focus on the quickly growing online grocery business in Middle America, where their brand is powerful and they have many locations, their strong e-commerce growth will continue."
While Walmart has done better than expected, the longer-term future of the business is linked to an expansion of digital services, according to Harry Chemko, CEO and co-founder of Elastic Path. The analyst tells Digital Journal: "Sales are up. Margin is down. Ecommerce is the main story. But what I think Walmart really needs to accelerate is its transformation from a retailer to a retail platform."
Chemko notes that Walmart needs to start to mimic other successful digital-led retailers: "Amazon and Alibaba benefit from a more diverse revenue stream such as that from AWS." There is also a need for the company to focus on delivery and logistics: "I expect we'll see another large acquisition focused on the last mile logistics side. Maybe a DoorDash or similar to get goods to the home faster. The key thing to watch through the rest of the year is Walmart's roll out of curbside pickup planned to over 3000 stores." Elastic Path sees this an essential element of e-commerce transformation.
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