Grocery is driving e-commerce success at Walmart
- A new study by Slice Intelligence shows grocery composes a large and growing share, at 26%, of Walmart’s U.S. e-commerce sales in the second quarter, according to Business Insider.
- Slice’s data shows Walmart.com, Walmart Grocery and Sam’s Club e-commerce sales combined grew 73% year-over-year in Q2 2017. Walmart.com represented about 50% of the company’s U.S. e-commerce sales in Q2, down from about 70% a year ago.
- The huge shift in share is due to the large amount of sales now coming from grocery e-commerce, buoyed by growth and expansion of Walmart’s grocery click-and-collect service. While virtually non-existent two years ago, Slice’s data shows grocery e-commerce sales have more than doubled from June 2016 to June 2017, and now accounts for more than a quarter of Walmart’s U.S. online sales.
Anecdotally, it’s been said that grocery is helping Walmart’s e-commerce push. Earlier this month during its second quarter earnings call, Walmart officials said the company’s grocery pickup service was showing “strong results” in the more than 900 locations where it’s operating. Slice Intelligence offers some hard data that substantiates the claim. According to Slice, a large and growing chunk of Walmart’s e-commerce sales in the U.S. comes from grocery.
Given the many moves the retail giant has been making to grab a stake of the high-growth online grocery market, this shouldn’t come as too much of a surprise. The company has been aggressively rolling out its Walmart Grocery click-and-collect pickup program across the country. It’s on track to have the service in 1,100 stores by year’s end and eventually in all of its 4,600 stores. This is just one of a few online grocery services the retailer is ramping up.
Earlier this year, Walmart started piloting an employee delivery program that paid associates for shuttling orders to customers’ homes. The retailer also has been testing automated kiosks where shoppers can grab their online orders any time of day without the assistance of a store associate. Together, these efforts helped boost Walmart’s 60% increase in its e-commerce business in Q2. They also contributed to the retailer’s biggest gain in grocery comps in five years.
Most analysts agree the retailer needs to continue expanding services and pushing the envelope to remain competitive. This is especially true given the growing roster of grocers expanding own order online/pickup-at-store programs — Kroger ClickList, H-E-B Curbside and Meijer Curbside Pickup, to name just a few. It’s also common practice for retailers to encourage trial with no/low service fees, digital offers and other enticements.
There’s a number of retailers teaming with Instacart as the grocery delivery service continues its aggressive penetration into more markets. In addition to partnering with warehouse clubs Costco and BJ’s Wholesale, several regional grocers recently inking deals with Instacart including Bashas, Publix and Wegmans. The latest to join the fray is Aldi, which just announced it's testing online shopping and one-hour delivery in Los Angeles, Dallas and Atlanta with Instacart.
Still, it appears Walmart is poised to win the online grocery game — at least for now. The wildcard that could change everything: the recent Amazon/Whole Foods union. It remains to be seen whether the online giant can break what now appears to be Walmart’s dominance of not only grocery, but grocery e-commerce. One thing’s for sure — Amazon has big plans to disrupt retail grocery, especially now that it has ready access to fresh food distribution and 400+ physical store pickup points across the country.
But consider this scenario: the merger actually might help sales at Walmart and other grocery retailers. As consumers get more accustomed to buying groceries online via Amazon/Whole Foods, there is a chance they’ll return to their favorite brick-and-mortar stores’ e-commerce sites to shop that way.
- Business Insider Grocery drives online growth at Walmart
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