Walmart, who has just announced its Q2 2020 earnings this week, have turned out to be the world’s largest retailer to make a strong comeback in the era of the new normal, with strong growth buoyed by its omnichannel retail push over the last few months.
The retailer’s US operations experienced a significant surge of 97% in its online sale from the same period last year, while its same-store sales rose 9.3%. Despite the pandemic clouds disrupting the net sales and operating profits, the company showed a rise in its total revenue by US$10.7 billion to US$134.6 billion, with net sales totalling nearly US$30 billion, a 3.4% hike over the previous year’s earnings.
The online sales jump of 74%, has made it clear that the company’s decision to forge ahead with an omnichannel retail strategy is paying off even amid the coronavirus related scares.
“We’re pleased with the progress we’re making on Walmart.com. We had really strong sales growth and significantly reduced losses. The tailwinds we’re experiencing are accelerating our progress to build a healthier e-commerce business as we add new brands, improve product mix, grow the marketplace and achieve more fixed-cost leverage,” said Walmart President and CEO Doug McMillon. “The stores and online merchant teams are now integrated, and we believe we’ll benefit from that change going forward.”
While Walmart saw a dip of 9.1% in its International operating income, e-commerce contributed at least 12% of the segment’s net sales, which was led primarily by the firm’s omnichannel retail capabilities.
The dip experienced by the retailers came because of the business restructuring charges made this year, and its acquisition of Indian e-tailer Flipkart, which the company closed in 2018 for US$16 billion.
“International’s results were better than anticipated coming into the quarter,” commented Walmart EVP and CFO, Brett Biggs. “Despite operational limitations in several markets due to the [coronavirus] crisis, including the government-mandated closure of Flipkart [in India], net sales increased 1.6% in constant currency, including nearly 40% growth in e-commerce.”
Further, the company during the times of COVID leveraged its scale and supply chain efficiencies to ramp up its e-commerce and food business footprints, bringing them into line with the company’s omnichannel retail thrust.
But Hari Vasudev, Walmart Global Tech India’s Country Head and SVP of Technology, highlighted the critical role that technology played to bring the omnichannel retail experience to customers who could no longer go physically to stores.
“When customers order through the [mobile] application they can choose to receive the contactless deliveries while checking out through the cart. With this, the driver also gets a notification that this is no contact delivery hence he leaves the items at the front door and steps back,” Vasudev explained. “And because we want to make sure that there is no option of fraud in this service, the drivers are asked to [take a] photo of the delivery items which they upload into the system. We use the same picture to push a notification to the customer that their order is out there and they can receive it.”
Furthermore, the company rolled out a new option for customers to elect to pick up their orders from a designated pick up point, rather than going into the store altogether. “So, we are putting a bunch of technologies in place that allows us to do appropriate bifurcation of the orders which helps us do the curbside with in-store sales,” said Vasudev.
“Likewise, when it comes to delivering at customers’ doorsteps, we are putting solutions which allow us to do better round optimization. With this, our drivers are able to deliver more orders to customer’s home in the time when the customer orders have spiked.”
The company in India has also rolled out the scan-and-go implementation in all its store to minimize potential infection and is also maintain the social distancing regulations along with ensuring seamless customer experience.
Speaking of Flipkart, the restrictions implemented by the centre in the nation during the first lockdown affected Walmart’s Q2 2020, causing the lack of growth of its international operations. However, the Indian e-commerce giant by acquiring Walmart India strengthened its presence in the B2B market.
Flipkart rebranded Walmart India as Flipkart Wholesale after its acquisition, and gave an opportunity to digitally transform the smaller retailers and mom-and-pop sellers (known as ‘kiranas’ in India) and to consolidate them under the Flipkart Wholesale platform.
“Kiranas and MSMEs [micro small medium enterprises] are central to India’s retail ecosystem and Flipkart Wholesale will focus on meeting their needs by providing small businesses a wide selection at significant value, powered by technology to make their lives easier,” Flipkart said in a statement last month, announcing the buyout.
Credits: Tech Wire Asia