Walmart and latest digital transformation initiatives

Walmart, which reported revenue of $152.3 billion (+7.6 percent) in the first quarter of 2023, has revealed its achievements following investment in digital transformation initiatives.
Walmart employeesWalmart has achieved growth of 17.3 percent in operating income to $0.9 billion during the first quarter. But Walmart’s operating expenses as a percentage of net sales fell 58 basis points during the first quarter.

Walmart’s e-commerce sales grew 27 percent, led by pickup and delivery.

“We are expanding our range of high-profile and sought-after brands that our customers are actively searching for but are not typically available at Walmart. This move aims to enhance our reputation as a premier digital shopping destination,” Doug McMillon, Chief Executive Officer of Walmart, said in its earnings report.

Walmart’s digital transformation goals are spearheaded by Suresh Kumar, the executive vice president and global chief technology officer (CTO) and chief development officer (CDO) of Walmart.

Suresh Kumar sets technical strategy, combining advances in computing with Walmart’s strengths to deliver the best customer experiences.

He leads the team in building tools and systems to digitally transform business operations, using the power of data to deliver a competitive advantage while improving the productivity of its associates.

In India, Flipkart’s e-commerce platform achieved significant growth, attracting new customers who are venturing into online shopping. Flipkart is expanding its presence in Tier 2 and Tier 3 cities, and its eKart business now collaborates with over 35,000 Kirana partners. Flipkart offers fulfillment services not only for its own sellers but also for third-party sellers.

Walmart’s global advertising business has achieved growth of over 30 percent in Q1. In the United States, Walmart Connect advertising sales have surged by nearly 40 percent, driven by strong momentum and an influx of new advertisers, particularly from marketplace sellers.

Over the past 12 months, the number of third-party sellers utilizing Walmart’s advertising capabilities has doubled.
Walmart gross profit rateMeanwhile, Sam’s Club’s ad business, known as the Member Access Platform, has witnessed double-digit growth, with the number of active advertisers increasing by more than 50 percent compared to last year.

Walmart’s advertisers are embracing in-club sales attribution feature, which provides clear insights on the returns of digital ad spend, both online and in physical stores, while also enhancing the member experience.

In Q1, there has been a significant increase in private brand penetration and grocery categories, with a rise of nearly 110 basis points following a 160-basis-point increase in Q4 and a 130-basis-point increase in Q3.

E-commerce sales have been driven by double-digit growth in store-fulfilled pickup and delivery services. Customers increasingly prioritize convenience and fast delivery. Walmart said it holds an advantage in this area by leveraging the proximity of stores to fulfill and deliver digital orders to customers’ homes.

Walmart’s omni-channel model is resonating with customers across various income demographics, as they seek out Walmart through digital platforms and physical stores, utilizing curbside pickup and delivery options.

Walmart is growing reputation for convenience, which closely matches reputation for competitive pricing.

Walmart CEO believes that the e-commerce giant’s investment in digital capabilities in markets worldwide will assist in driving substantial revenue growth in the coming years.

“The second aspect of our financial model involves diversifying our earnings through an improved product and business mix. to enhance our product mix, we are focused on increasing sales penetration in higher-margin categories, such as apparel and home goods,” Doug McMillon said.

Walmart plans to achieve this through expanding its e-commerce marketplace assortment and providing an upgraded presentation and shopping experience in remodeled stores. Walmart said its e-commerce assortment encompasses over 200 million SKUs in apparel and nearly 60 million in home categories.

Furthermore, Walmart’s remodeled supercenters adopt a distinctive approach to showcase general merchandise, featuring more brand shops, digital displays, mannequins, wider aisles, and updated fixtures. Early indicators suggest that customers are responding positively to these initiatives, and Walmart intends to implement these features in 300 stores this year.

Sam’s Club has been experiencing robust growth in its membership accounts for several years, achieving yet another record high in Q1. Over the past three years, membership counts have increased by nearly 30 percent, with a notable increase in the number of millennials and Gen Z members.

Walmart said nearly 50 percent of Walmart+ members have joined through the online pickup and delivery channel. Furthermore, members tend to spend more and shop more frequently compared to non-members.

Rajani Baburajan