The past year was another big one online for Wal-Mart Stores Inc. And in the ongoing race to catch up with Amazon.com Inc. and become an even bigger online merchant, Wal-Mart, the world’s biggest retailer, sees an e-commerce future that’s increasingly global and mobile, CEO Doug McMillon told Wall Street analysts this morning on a year-end earnings call.
“Overall e-commerce sales grew approximately 22% in fiscal year 2015; solid, but not quite as strong as we wanted,” McMillon told analysts. “One of the headlines in e-commerce is the tremendous growth from mobile devices and in fact, nearly 70% of Walmart.com traffic in the U.S. came via mobile during the recent holiday period. Customers who previously shopped using their laptops are now using their phones and tablets.”
For the year ended Jan. 31, Wal-Mart, No. 4 in the Internet Retailer 2014 Top 500 Guide reported:
- Global e-commerce sales increased 21.6% to $12.20 billion from $10.03 billion for fiscal 2014. Wal-Mart didn’t break out regional metrics.
- Total net sales increased 1.9% to $482.22 billion from $473.07 billion.
- The web accounted for 2.5% of sales compared with 2.1% in fiscal 2014.
- U.S. comparable-store sales, which include Wal-Mart stores and Sam’s Club warehouse locations, increased 0.5%. Wal-Mart didn’t provide an international breakout.
- Net income was $16.36 billion, up 2.1% compared with net income of $16.02 billion in the prior year.
Wal-Mart will continue to make a significant investment into its global e-commerce operation, McMillon told analysts. “We’re striving to balance sales growth and profitability,” he said. “We’re being thoughtful with our investments, ensuring we have the infrastructure in place to build this business for the long term. I’m excited about the possibilities.”
Wal-Mart plans to spend heavily to continue to grow e-commerce and will invest at least $1.2 billion and possibly substantially more in the next year, the retailer says. “We are dedicating capital related to our digital and e-commerce businesses of $1.2 to $1.5 billion,” Chief Financial Officer Charles Holley told analysts. “We plan to step up our incremental investment again in fiscal 2016 for our e-commerce activities around the world.”
In the year ahead, Wal-Mart plans to roll out several new web programs, Neil Ashe, global e-commerce CEO, told analysts. “We’re investing in four areas: our global technology platform, our next-generation fulfillment network, our talent, and on integrating digital and physical,” Ashe told analysts.
In the next year Wal-Mart expects to more than double the SKU count of its online inventory. “We’ll do that through a thoughtful balance of our own merchandise and marketplace sellers,” Ashe told analysts. “We expect to double our assortment this year to well over 10 million SKUs.”
Wal-Mart also plans a continued rollout of Pangaea, the internal name Wal-Mart has for its internal e-commerce platform. “Our investments will continue to significantly enhance the customer experience and drive greater efficiency,” Ashe told analysts. “This will include the continued rollout of our U.S. site based on Pangaea, which will make checkout faster and easier for our customers and it is also serving as the backbone to an integrated experience across online, stores and mobile, and it will empower new ways to serve customers through mobile.”
Faster e-commerce fulfillment is another area Wal-Mart will continue to put resources into, the company says. “Our next-generation fulfillment network combines new large-scale fulfillment centers that combine with our distribution centers and stores, all connected by Wal-Mart’s transportation network,” Ashe told analysts. “Our data scientists have built algorithms that dictate the assortment that needs to be placed in our different nodes, and to dictate from which node we ship an order.”
The retailer also will open four e-commerce distribution centers, including one in Texas and one in Georgia. “Four new fulfillment centers will come online starting in the second quarter,” Ashe told analysts. “When fully operational, these centers, along with our other nodes, will position us to serve the vast majority of the U.S. population fast and at a low cost.”
For the fourth quarter Wal-Mart reported:
- Global e-commerce sales increased 18%, but Wal-Mart didn’t break out metrics.
- Total net sales increased 1.5% to $130.65 billion from $128.78 billion.
- U.S. comparable-store sales, which include Wal-Mart stores and Sam’s Club warehouse locations, increased 0.5%. Wal-Mart didn’t provide an international breakout.
- Net income was $4.96 billion, up 14% compared with net income of $4.35 billion in the prior year.