Wal-Mart's Online Sales Boost
The competition between Wal-Mart and Amazon has come to its peak, with the fastest rate of Wal-Mart's e-sales growth over the last five years.
According to Wal-Mart, the rise in their online sales counted for 69% in the first quarter. Total income increased for 1.4% to 117.5 billion USD.
This is the effect of the recent online expansion strategy of Wal-Mart, with the acquisition of Jet.com Inc. last year.
Suddenly, Wal-Mart became the first Amazon's competitor.
The shares gained as much as 1.2 percent to $76 in early trading after the results were released. The shares raised 1.2% to $76 in early trading.
Growth at traditional Wal-Mart stores was more moderate, but still exceeded the forecasts. Single-store sales increased 1.4% against 1.3% prognosis. This was the 11th in a row period of the company's US sales.
Share earnings made up $1 a share, while analysts forecasted only 96 cents.
Wal-Mart's CEO Doug McMillon is inspired with the figures and expexcts even better results in the second quarter.
Talking about the online presence, McMillon explains Jet's acquisition as a booster of the online growth. After the purchase of the company he assigned co-founder Marc Lore responsible for US e-commerce. Then Wal-Mart bought out Moosejaw and ModCloth retailers.
Now, there are negotiations regarding buying a clothing startup Bonobos for nearly $300 million.
The bargains, of course, have provoked Wal-Mart's online business, but the most part of the growth is associated with the retailer's own web-site.
However, this growth was rather expensive for Wal-Mart, the company's expenses for promotion of its e-commerce rose faster than sales, but the CEO has promised to change this situation during the year.
At the same time, Wal-Mart doesn’t forget about its brick-and-mortar stores – the retailer always strive for improving customer experience by fast service, wide range of products and great deals.
The retailer has replaced the old handheld bar-code readers, launched trainings for its employees and released store managers from unnecessary stuff in order to give them more time to spend it on the sales floor.
Despite this online bustle, the retailer knows that in-store experience still means a lot for the customer.