Walmart’s earnings provide new digital information

The first is Walmart +. Don’t expect the company to expose actual membership numbers, but expect an expansion of services within the program, perhaps the launch of multi-city food delivery or new social commerce initiatives as Walmart prepares for a possible integration with TikTok. But while Walmart will likely shy away from specific numbers, PYMNTS research will not.

An exclusive research project by PYMNTS shows that Walmart could leverage its new membership model to capture a larger portion of the consumer’s entire salary. A survey of 2,165 surveyed consumers conducted October 27-28 this year reveals that approximately 17% of US consumers report having a subscription to Walmart +, just over a month after its launch. This compared to 68% of consumers who claim to belong to Amazon Prime, a program launched in February 2005 and which now has 150 million members globally. Of that 17 percent with Walmart +, 15 percent are consumers who already had an Amazon Prime account, and about 2 percent of them don’t.

Seventeen percent is a good number for a show that lacks a streaming and entertainment option (at least at the moment). It will be interesting to see if Walmart benefits from the program. Amazon doesn’t specifically split its Prime revenue. PYMNTS measures this under “subscriptions and other” revenues, which includes advertising on its site.

“Walmart has been thinking about opportunities outside of its traditional retail business as it seeks to double up on high-growth opportunities. It has sold slower growing companies and pursued new avenues with its TikTok offering. It may even go into advertising, buoyed by increased tech spending, e-commerce presence and partnerships, ”according to an earnings preview at Barron’s.

The more Walmart moves to eCommerce, the more attractive its advertising prospects and ancillary revenue will become. Brands want to be as close to the “moment of truth” as possible, which is the gap between considering a purchase and actually pulling the trigger. According to eMarketer, brands will spend $ 17.37 billion on advertising on ecommerce sites and apps this year, up 38.8% from 2019, an increase in spending driven by COVID-19. By the end of 2020, eCommerce advertising will account for 12.2% of the country’s digital ad dollars, eMarketer reported.

Amazon took a good percentage of that number. Its third-quarter earnings were driven in part by a 51% increase in advertising revenue, up $ 5.4 billion from $ 3.6 billion in 2019.

Of course, another key trend to watch is Walmart’s ability to continue capturing digital change and growing in the digital economy. Its e-commerce sales in the United States increased 74% year-over-year in the first quarter and 97% in the second quarter. Can the retailer replicate it? Year after year it can – it’s highly likely Walmart can beat the 97 percent YOY level. Quarter-to-quarter increase is the number to keep an eye on – comparing quarters will most likely show consumers are returning to Walmart stores instead of shopping online. After all, the Walmart + program is a hybrid. It pushes online shoppers to sign up for the program and subsequently use online shopping, but it also encourages store visits by promoting its scan-and-go payment capability.

Judging by its recent announcement that it will adjust its distribution center operations to increase its e-commerce capabilities, Walmart is clearly looking to acquire more digital deals and is concerned that it will need those DCs to package and ship on time. The company announced Thursday (November 12) that it will create areas within 42 of its warehouses – called “eCommerce pop-up distribution centers” (eDCs) – to fulfill growing online orders.

Walmart said it expects up to 30 percent of vacation volume to be shipped from the new pop-up eDCs.

“The flexibility to open an eDC whenever our supply chain network experiences a peak in demand allows us to supply our customers when they need us most, constantly following the health and safety measures we have put in place for months. “said Greg Smith, executive vice president of supply chain for Walmart USA