Will Walmart Become The Third-Largest eTailer?

It would be an overstatement to say that Amazon should be incredibly worried about Walmart these days — as Amazon is undeniably doing great by almost any rational measurement. Still, coming off Q3’s latest earnings report, it might not hurt Amazon to look over its shoulder from time to time. That’s because, in the world of digital commerce, Walmart’s footsteps have grown louder over the last year as it catches up with the eCommerce giant.

By the numbers, Walmart’s performance was strong. Earnings were $1.08 per share, $.07 ahead of the $1.01 analysts had forecast. Revenue was up 1.4 percent to $124.89 billion, up from $123.18 billion last year, a miss on what was expected ($125.55 billion). Walmart’s net income came in at $1.71 billion or $.58 a share, compared with $1.75 billion or $.58 per share a year ago.

Same-store sales were up again by 3.4 percent (Walmart’s 16^th consecutive quarter of growth), better than the 3.1 percent analysts had projected. Foot traffic picked up 1.2 percent, as did the basket size at 2.2 percent.

“We have momentum in the business as we execute our plan and benefit from a favorable economic environment in the U.S.,” said Walmart CEO Doug McMillon in a post-earnings release statement.

As has been the trend this year, grocery continued as a standout player this quarter, representing more than half of Walmart’s total sales. The retailer also announced yesterday (Nov. 15) that it now has a grocery pickup option at roughly 2,100 stores across the U.S., as well as grocery delivery at about 600 locations in 50 metro areas. Amazon, by comparison, has grocery pickup at 22 Whole Foods locations in 48 metros.

Walmart did not break out individual results for its grocery segment, but noted that growth was in the “low single-digits” and that its fresh food offering saw “strong traffic.”

However, eCommerce was Walmart’s headliner during this earnings period, with digital sales up 43 percent and well on pace for Walmart to achieve its full-year goal of 40 percent overall eCommerce growth. If Walmart can stay on that predicted pace, it could overtake Apple on the list of the world’s largest eCommerce retailers — Apple now holds that number-three spot at 3.8 percent; if Walmart hits its projections, it will take a 3.9 percent share of commerce. Amazon has a 48 percent share of the eCommerce market and controls 2.1 percent of all consumer spending, according to a detailed PYMNTS analysis.

As it continues to expand, Walmart has made its growth clear by acquiring more digital brands and broadening its marketplace for third-party sellers. Marc Lore, head of Walmart’s U.S. eCommerce business, recently said that Walmart could one day own more than 40 independent eCommerce retailers.

Walmart Pay attracted some analyst interest during the Q&A segment of the earnings call, with analysts wondering about the adoption rate, since informal and anecdotal evidence has indicated that it is fairly low. Walmart executives noted that growth was satisfactory, and that they believe it is likely to grow as Walmart builds increasing functionality into its mobile app and attracts more users.

“We have an opportunity to improve the margin mix in this business, and we’ll do this by expanding the tail of the [online] assortment through first-party items and marketplace,” McMillon said.

Great expectations translated into full-year forecast revisions: Walmart now forecasts same-store sales in the U.S. to rise “at least” 3 percent, as opposed to “about” 3 percent. The retailer said adjusted earnings per share (EPS) will fall within a range of $4.75 to $4.85, up from a prior range of $4.65 to $4.80.

The retailer is also sticking with U.S. Chief Merchandising Officer Steve Bratspies’ October statement that, this year, Walmart has been “building up to what we think will be the best holiday yet. ”

Walmart CFO Brett Biggs reiterated in the post-earnings release: “We feel good about our competitive position heading into the holiday season. The business remains strong; we’re executing our strategy well.”

The proof, of course, will be in the next round of earnings figures in January, when we see how much of the holiday gift haul — and feast — was purchased at a Walmart.