Target and Walmart report soaring e-commerce sales as US consumers enjoy strong economy

Both groups report 40% growth in e-commerce in second quarter results, as robust US economy and greater focus on the digital environment pays off.

In Q2 results both Target’s and Walmart’s stronger focus on the e-commerce environment appears to be paying off as they have announced growth of 41% and 40% in online sales, respectively. This has helped to push both to strong results for the quarter and underlines that major brick-and-mortar retailers will continue to build up their online business lines.

This means more pressure on shippers and suppliers as the online competitive environment strengthens and major players continue to invest in shorter turnarounds from orders to deliver.

Walmart announced in its earnings call that its e-commerce initiatives were being aggressively expanded with new product lines and elements to the digital experience. These included:

  • A three-dimensional virtual tour and the ability for customers to quickly “buy the room” based on their preferences.
  • JetBlack, a subscription service that allows customers in New York City to text what they need and have it delivered the same day, for which they claim there is a waiting list.
  • Integration of over 1.5 million classroom supplies lists to make shopping easier for parents.
  • A new baby nursery destination.
  • The addition of 1,100 new brands to Walmart.com year-to-date.

Also announced on the earnings call was that their Jet brand plans to open a fresh fulfillment center that will offer a same-day grocery delivery to customers in New York City.

For its part, Target is heavily focusing on delivering goods to consumers in shorter times and to their doorsteps, emphasizing a variety of same-day or next-day delivery options. Target noted that it can now operate order pick-up at all its stores, 95% of which are ready within one hour, and that it had extended same-day home delivery to more than 1,100 stores.

However, both are playing catch up to the foremost e-commerce players and trying to reorientate their businesses to operate more effectively in the online environment.

They both still have large gaps in coverage and e-commerce is still very much a minority for both. Target is looking to be able to offer same-day delivery to 65% of the US population by the year end and can reach 75% with next-day delivery as of mid-2018. Walmart wants to have grocery delivery coverage for 40% of the US by year-end, illustrating the gaps that continue to exist.

Target’s impressive e-commerce growth of over 40% also meant a total comparable sales growth of just 6.5%, with in-store sales growing by 4.9%, which emphasises that digital sales are still very much a minority.

Both sets of results underline the current confidence among the US consumer and strong spending rate growth. We can expect aggressive continued expansion of e-commerce coverage if the current economic environment is sustained, leading to heightened demand for warehousing and shipping capabilities for major US retailers.

Click here for Q2 Target’s results.

Click here to Q2 Walmart’s results.

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