Walmart’s ecommerce business surpasses $100 Billion
Here are a few key takeaways brand operators should be mindful of coming out of Walmart’s 2023 earnings report :
Inventory Consolidation & Margin Impact:
Walmart, like other retailers, experienced a decrease in overall inventory of approximately 3%, with an improved inventory management cited as a driver behind their $3.1 Billion improvement in Free Cash Flow.
With a slight enhancement of gross margins by 0.4%, ongoing margin pressures and inventory reductions are anticipated as we progress into 2024.
One of the key contributors to ecommerce revenue growth has been pick-up and delivery. Therefore, in an operational environment necessitating smarter inventory placement to ensure availability across in-store (known as pick-up locations) and fulfillment centers, transparency into availability across all digital shelves becomes significantly important for driving growth in a more constrained environment.
Advertising & International Growth:
Walmart’s recent venture with Vizio to enter the streaming arena warrants its own dedicated post.
It is worth noting that Walmart has been significantly expanding its advertising capabilities to introduce fresh inventory into the market. Additionally, it has been enhancing its buying tools, such as second price auctions, to enable advertisers to compete more effectively and allocate their budgets within the Walmart Connect Retail Media Network.
Coupled with a 44% international growth rate (with international advertising experiencing a 76% surge, led by Flipkart in India and Walmex in Mexico), Walmart presents itself as a considerable growth platform for global ecommerce leaders.
When formulating your global and omni investment strategy, this new inventory offers remarkable opportunities for experimentation and the adoption of new incremental advertising investment approaches.
It is encouraged to avoid solely examining ROAS in isolation by retailer. Instead, an omni-approach should be developed, with a focus on incrementality metrics like iROAS, to genuinely assess the most advantageous areas for future ad dollar investments..
