Cashback News – Oct 3: What’s up with Walmart? A global retail and e-commerce update

Cashback News – Oct 3: What’s up with Walmart? A global retail and e-commerce update

- in E-Commerce, Slider

Walmart 250 billionLast week, news media reported that Walmart was considering investing up to $1 billion in Indian e-commerce leader Flipkart. It’s time to take a fresh look at Walmart’s US retail strategy and what may be driving its international e-commerce moves as well. CNN Money profiled the Indian marketplace and Walmart’s Flipkart potential. With the acquisition of complete, Walmart is now poised to go head-to-head with Amazon and analysts seem to be warming up to the idea.

Click and collect may become a valuable strategy for Walmart’s acquisition of While Walmart Pay has had early success, Retail Dive looks at some of the challenges ahead for the new payment app. Walmart is now imposing 95% delivery compliance on its suppliers and that could be a hard standard to meet for some. A push for bigger online grocery sales is coming soon according to CIO Karenann Terrell.

Next up for Walmart? According to a new patent filing by Walmart, how about robotic shopping carts? Non-food items cannot be sold in foreign-owned grocery stores in India – a challenge for Walmart. Keybanc highlighted a 27% jump in Walmart shares and an “outperform” rating. MarketRealist said Walmart gross profit margins were positive but may see pressure due to higher wages and investments in e-commerce and technology.

Why Walmart is interested in India’s biggest online retailer

Walmart-DC-PhotoThe retail giant is reportedly in talks to invest up to $1 billion in Flipkart, the top e-commerce firm in a market that Walmart has repeatedly failed to crack. Both companies declined to comment on negotiations.

But the rationale for a deal is compelling: Walmart (WMT) would gain access to 1.3 billion consumers in a market where it currently has very limited operations. Flipkart would get the cash it needs to fend off a pack of hungry rivals.

“Walmart will have to learn how Indians shop here, because it is very different from the way it happens in the developed markets,” said Krishnarajan Nedungadi of Indian retail consultancy Ramms. “Flipkart knows how it happens here.” Via

Walmart Has Completed Its Acquisition of“A lot of folks ask me ‘Why,” CEO McMillon said in a blog post. The answer he said was in the savings both Wal-Mart and Jet can together offer shoppers.

Jet, with its ability to lower prices as customers add more items to their shopping carts, will help the world’s largest retailer reach more customers such as millennial shoppers. The deal would also strengthen Wal-Mart’s existing e-commerce infrastructure, McMillon said.

Wal-Mart has built its website into the second largest online retailer by traffic in the U.S. in the past six months, the blog post said. It has also expanded the assortment of products on its website from 7 million to 15 million items and is adding a million more each month. Via

Some Marriage Advice for Walmart and most newlyweds know, tying the knot brings an onslaught of marriage advice. Walmart, which officially closed its $3.3 billion deal this week to buy online retailing upstart, should brace itself.

You can’t fault folks: The purchase re-awakened hopes Walmart could offer real competition to Amazon. Consumers, brands and rivals have reason to fear an Amazon monopoly if it’s left unchecked by a strong opponent.

Click and Collect
Could Walmart be jump-starting its online sales growth? In that vein, here are four things Walmart can do now to make the most of its new marriage Via

Is Walmart Pay doomed to repeat CurrentC’s mistakes?

Walmart PayShortly after Independence Day 2016, Wal-Mart Stores Inc. made its Walmart Pay application available for use in all of its 4,600-plus stores nationwide — a massive and rapid rollout, especially considering the app launched just last December.

Walmart Pay — available on both Apple’s iOS and Google’s Android — enables consumers to purchase merchandise with their smartphones in Wal-Mart stores. Shoppers using Walmart Pay link their account to their payment method of choice — a bank account, pre-paid card, credit or debit card and/or Wal-Mart gift card and Savings Catcher balance (the latter a replacement for price-matching at some Wal-Mart stores that automatically refunds the difference between a Wal-Mart price and a lower one found at a competitor). The payment feature is just one aspect of Walmart’s app, which also allows users to create or add to a shopping list using voice input or text or by scanning barcodes, check prices or product availability and locate items in store aisles.

Soon after announcing the completion of Walmart Pay’s nationwide rollout, Daniel Eckert, senior vice president of services for Wal-Mart U.S., noted that payments through the app increased 45% compared with the week before — not exactly a big surprise, considering the big bump in opportunity — and that 88% of transactions were coming from repeat users. Consumers were giving the app high marks, too: 82% recommended Walmart Pay and 75% awarded it five stars on app store ratings, according to Wal-Mart. Via

Walmart Shrinks Delivery Window; Turns Up Pressure on Suppliers

Walmart logistics 2The requirements for being a supplier of Wal-Mart Stores Inc. just keep getting tougher. In the Be-Careful-What-You-Wish-For Department, suppliers lucky enough to be represented on Walmart’s shelves are constantly being asked to cut their prices while ramping up service.

The latest demand comes in the form of a tightening of shipping windows, from four days to two. At the same time, Walmart is upping its delivery compliance requirement for North American suppliers from 90 percent to 95 percent. The changes take effect in February of 2017.

Walmart’s delivery compliance standards were first announced in 2010, setting a “must arrive by date” (MABD) for all merchandise from suppliers, who were given six months to comply. Current guidelines allow for delivery two days early or one day late, creating a four-day window. If a supplier misses that period 10 percent or more of the time, it’s charged 3 percent of its quarterly invoice. Via

Wal-Mart’s CIO on the Retailer’s Push Into Online Grocery Shopping world’s biggest corporation in January combined its corporate information-technology and e-commerce-systems groups into a single unit called Walmart Technology, hoping to move faster to build technology to blend physical and online shopping. The company spends more than $10 billion a year on IT and in August signed a $3.3 billion deal to jump-start e-commerce growth by buying web retailer Inc.

Karenann Terrell, Wal-Mart’s chief information officer, works in the center of the tumult—with Jeremy King, chief technology officer of global e-commerce—directing projects such as mobile apps, store checkout upgrades and supply-chain revamp.

Wal-Mart gets more than half its U.S. revenue from food and groceries, an area that has been slow to shift online. But with overall sales weak—a revenue drop in fiscal 2016 and a lowered forecast for the current year—Wal-Mart plans to restore growth in part by reinventing its online grocery business, allowing customers to place orders online and pick them up in stores. Via

And the Patent for Robotic Shopping Carts Goes to… Walmart? days, it’s fairly common to see the likes of NASA and Google racking up robotics patents, but a recent first went to a company known more for bottomed-out prices than high-tech (and which, incidentally, holds the Guinness World Record for selling Guinness World Records).

Earlier this month, Walmart received approval on its patent application for robotic shopping carts that the company hopes will help streamline customer experiences in its stores. As Popular Science explains, shopping carts are useful for loading up with items but frequently difficult to manage, and “[Walmart], the physical retail giant, doesn’t want people to worry about the inadequacies of carts while shopping.”

Filed in March of this year, the patent application describes a system of autonomously steered and self-returning carts that can, in effect, provide significant cart-related customer service when employees aren’t around or are occupied (presumably) with higher-level tasks. It also asserts the robotic carts’ potential usefulness for “[when] shopping carts are left abandoned, aisles become messy, inventory is not displayed in the proper locations or is not even placed on the sales floor, shelf prices may not be properly set, and theft is hard to discourage.” Via

Allowing a little of non-food would have been nice: Walmart India CEO DELHI: US retail giant Walmart is still evaluating India’s policy of allowing 100% foreign investment in food retail even as not allowing any non-food item makes it tough to create a competitive model, Walmart India CEO Krish Iyer has said.

“It would have been nice to see a little of non-food being allowed, not purely from the point of view of economics, which is important, but also from the point of view of the consumer because the consumer who comes to the stores for food and grocery, is wanting to shop everything under one roof…. The missing non-food does cause a little problem in terms of creating the right model and also competing with the domestic retailers because it doesn’t provide a level plane,” Iyer said on Tuesday.

He said the company is working on tackling this challenge, and will conceptualize the model. “We assure you we are in the country for a really long time, and my CEO says we are in India for the next 100 years, so we will take all the right steps and make sure that there is no step which is taken backwards,” Iyer said at a conference on FDI in marketing of food products and promotion of exports organised jointly by CII and the ministry of food processing. Via

Wal-Mart to rally 27% on profit rebound share gains and an inflection point in earnings could take shares of Wal-Mart to $90 in the next 12 months, a gain of 27 percent from Thursday’s close, according to KeyBanc, which initiated coverage of the retail giant with an outperform rating.

“Walmart’s investments in store experience, e-commerce and eventually price are helping drive sustainable market share gains, and we think earnings are poised to inflect positively,” wrote equity analyst Edward Yruma in a research note Friday.

“The company has posted positive comps for eight consecutive quarters, which validates recent investments. We think that the company can opportunistically use price investments as a lever to drive the targeted incremental $45B-$60B in sales over a three-year period,” read the note. Via

Walmart’s Operating Margin Might Be under Pressure (WMT) delivered a higher gross margin in fiscal 2Q17, which ended on July 31, 2016. Its gross margin rose about 60 basis points to 25.1% that quarter. The improvement in its gross margin was driven by better margins in food and consumables, procurement savings, and lower transportation expenses due to lower fuel costs in its US segment.

The company also attributed its gross margin improvement to efficient inventory management and the implementation of its cost analytics program in certain international markets.

Operating margins
Walmart’s operating margins improved in 2Q17 by about 10 basis points to 5.2% on a year-over-year basis. The slight rise in the company’s 2Q17 operating margin was due to a higher gross margin, which was partly offset by a rise in SG&A (selling, general, and administrative) expenses as a percentage of sales.

Why margins might be under pressure
Walmart’s operating margin fell to 4.8% in the first half of fiscal 2017 from 5% in the comparable period of the previous fiscal year. Overall, the company’s operating margin might continue to be under pressure in the second half of the year due to higher wages and continued investments in online growth and information technology. Via

Walmart works its global model

We’re keeping a close eye on Walmart in the US and its potential investment in Flipkart in India. Stay tuned for breaking news and regular updates from Walmart around the world.




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