Walmart Ups Its Game Against Amazon. Should Investors Be Bullish?
Author: Tim Phillips
Date: January 28, 2023
Retailing giant Walmart Inc (NYSE: WMT) saw shares hit an all-time high, surging by 6.3% yesterday as the company announced a new online subscription service – named Walmart+.
Giving members benefits such as savings on petrol and free delivery, the service is clearly aimed squarely at taking on Amazon and its Amazon Prime service.
Tim’s Take/Two Cents:
It’s taken a while but Walmart has finally offered its vast following an online subscription service for free delivery (on orders over US$35).
For me, it’s surprising it hadn’t happened sooner but the Covid-19 pandemic was likely the push that Walmart CEO Doug McMillan needed to finally pull the trigger on it.
It makes total sense given Walmart’s growing online presence. Its latest quarter saw an impressive 97% year-on-year increase in online sales.
Even with that, online sales only made up around 11% of Walmart’s massive US$93 billion or so in its latest quarter. Clearly, there’s a lot of room ahead to grow that online share for the “Beast of Bentonville”.
Adding that much sought-after recurring stream of revenue, via the subscription model, is also taking a page out of the software playbook as Walmart looks to position itself to take advantage of multi-channel retail world.
Partnering with online shopfront specialist Shopify Inc (NYSE: SHOP), targeting third-party sellers, was also a shrewd move.
Having perhaps perfected its logistics and delivery systems after being late to the online game, I think investors can be confident that Walmart will be a big winner in the massive growth of the online retail space over the next few years.
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