Key Takeaways
- Walmart’s growth has been propelled by digital sales, which have now grown by more than 20% in the U.S. for seven consecutive quarters, the company said.
- The company is leaning into e-commerce by automating fulfillment and exploring new ways to reach customers with AI.
Walmart is sliding into its Chilean shoppers’ DMs—and it’s working.
The retail giant’s WhatsApp prompts asking if customers would like to restock their usual goods are so successful that they’re the basis for a fifth of its local e-commerce business, the company said, a development that highlights just how far Walmart (WMT) has come from its days as a big-box chain.
E-commerce accounts for nearly a third of Walmart’s international business, and about half of its sales in China, the company said Thursday. Walmart’s U.S. e-commerce transactions jumped 28% last quarter, the company said. Digital sales have now increased more than 20% in the U.S. for seven straight quarters, Walmart executives said on a conference call Thursday.
Walmart has refined its approach to digital orders, making its e-commerce business profitable, company leaders said. About half of the material processed by U.S. fulfillment centers is handled via automation, and many stores receive merchandise from automated distribution centers, they said. This has helped Walmart reduce its expenses by some 30% for several quarters, the company said.
Why this News Matters to Investors
Retailers are seeking new ways to engage customers with technology, like selling through ChatGPT or other types of “agentic commerce.” Walmart has been building a huge digital business using a range of tactics. One example: automating orders for consumers, and pinging them for approval on WhatsApp.
“The results we’re delivering today are powered by our people and by technology,” CEO Doug McMillon said, according to a conference-call transcript made available by AlphaSense. “We continue to get better at putting our data to work, building more capable tech products, and platforms, and by deploying physical automation.”
Walmart released results Thursday that exceeded analysts’ expectations, raising its outlook for the full fiscal year. John Furner, head of Walmart U.S., will soon assume the CEO role. Shares of Walmart popped 6% after it reported its results. Shares are now up nearly 18% so far this year.
The retailer is optimistic that intensifying its focus on digital sales will pay off, even as pressure mounts for some consumers. Walmart made inroads with customers across the income spectrum, but said the gains were most pronounced among high earners, and some low-income households are moderating their spending.
Walmart is partnering with OpenAI on improving the buying experience for those shopping via ChatGPT. It’s also experimenting with new ways to reach customers, who are increasingly ordering items online for delivery, or to be picked up at a store.
In Chile, Walmart has been filling digital shopping carts for customers based on their prior orders, and inviting them to review the orders through a WhatsApp prompt, said Kathryn McLay, CEO of Walmart International. The tactic has been so popular that Walmart plans to use it in other markets, she said.
“They can see we’ve created a basket for them that actually has all the brands that they normally buy in the kind of intervals that they like to buy it, and they have full agency over” it, McLay said. “We know what they want, and we can anticipate that and make their lives easier.”