What Does Walmart’s Earnings Miss Mean for eCommerce?

walmart2

When Walmart acquired Jet in August of 2016, there was a lot of talk about building synergy between the two companies. While Jet continues to perform very well, Walmart hit a recent stumbling block in their ecommerce pursuit.

Unlike their biggest rival Amazon, who just posted another round of blockbuster results, Walmart’s stock recently took its biggest hit in over two years. The reason for this drop was their earnings report. Specifically, Walmart reported that their online sales grew at a far slower rate than they did previously.

What Caused the Slowdown?

Since investors obviously wanted to know why Walmart experienced an ecommerce slump, the company’s CFO said they “had a few operational issues from an inventory replenishment perspective.” Although he didn’t discuss the matter any further, it’s not hard to see that ever-increasing competition likely played a role as well.

In just the last year, Amazon made its huge Whole Foods acquisition and pushed forward a number of initiatives, ranging from Alexa to exploring healthcare. Given how dialed in Amazon is with their ecommerce retail business, it’s not hard to see why Walmart is struggling to keep up the pace.

Is eCommerce in a Slump?

Another reason why investors reacted to this news so strongly is because Walmart is one of the biggest companies in ecommerce. So when you hear that their growth slowed, it’s natural to wonder about your own business.

The good news is as long as you zoom out, you can see that ecommerce is still on a very healthy trajectory. Just looking at Walmart alone, they saw a 44% growth in ecommerce over the course of 2017. For most businesses, that would be an amazing year. But going back to the fact that Walmart is a leader in this space and competes directly with Amazon, that almost fifty percent growth wasn’t enough for what investors were expecting.

Looking beyond Walmart, Amazon has obviously shown just how much consumer demand continues to grow for ecommerce. One of the biggest challenges Amazon continues to face is building warehouses and fulfillment centers fast enough to keep up their delivery times.

Another bright spot for ecommerce was Q4. As we talked about in our post on 2017 holiday shopping, the season got off to a booming start and was able to keep up the pace. So if your business sells online, you can expect 2018 to be another excellent year.

The only caveat is that you need a website that’s easy to use throughout the entire customer journey. An important starting point is a site that performs well on mobile. Then, when someone decides to buy, a frictionless checkout process will minimize the number of abandoned carts you experience.

If you have any concerns related to limitations of your current processing company, taking a look at different credit card processors and potentially switching may be exactly what your business needs to unlock even greater ecommerce growth.

Posted on Tuesday, April 3rd, 2018