Walmart’s Ecommerce Soared 27% in Q1. Here Are 4 Reasons Why.
In Q1 2023, Walmart witnessed a 27% year-over-year growth in its U.S. ecommerce sales. High-income consumers, attracted to Walmart for cost savings amid inflation, are driving this digital sales increase. Walmart's investments in pickup and delivery have played a significant role in this growth. The various components of Walmart's digital ecosystem work together, reinforcing each other's success. Here are 4 factors that are driving the success:
Pickup & Delivery
“Customers increasingly value convenience and speed of delivery. We have an advantage here as we leverage the proximity of our stores to fulfill and deliver digital orders to customer homes. In many cases, we can get orders delivered faster to customers while building a sustainable omni economic model, said Walmart CFO, John David Rainey
Walmart Marketplace
Walmart is prioritizing the expansion of its ecommerce assortment through the addition of third-party sellers, resulting in a 40% year-over-year increase in seller counts. This growth not only increases the range of products available in specific vertical categories but also expands the available categories.
Food, consumables, apparel, and home products have seen significant growth. Walmart has also improved the ecommerce experience through enhanced search results, website redesign, and a doubling in the number of sellers using Walmart Fulfillment Services for packing and shipping items.
Advertising
Walmart Connect, the media arm of Walmart, experienced over 30% growth in the first quarter, including a nearly 40% increase in U.S. sales.
The expansion of the marketplace is closely tied to advertising growth, as many new advertisers are also sellers on the platform. In fact, the number of third-party sellers utilizing Walmart's ad capabilities has doubled in the past year.
The increased presence of marketplace sellers makes advertising for differentiation more valuable and enhances the ability to target specific user groups.
Higher Income Shoppers
Despite inflation, Walmart is increasingly attracting high-income shoppers who are looking to save money on groceries. These customers are also more inclined to shop online, and Walmart has expanded its pickup and delivery capabilities to cater to their needs.
“As we have these new shoppers coming to us, as we have higher income shoppers coming to shop for not only grocery, but general merchandise, we want to retain those," says John David Rainey, Walmart CFO