Walmart poised to overtake Apple in online sales
Heading into the busiest shopping season of the year, Walmart is set to overtake Apple in online sales, according to eMarketer.
The world's largest retailer, which received 3.3 percent of online spending in the U.S. last year, is projected to see that share hit 4 percent by year-end, the research firm said in a report. That would put Walmart, which includes Jet.com and Sam's Club, behind only Amazon and eBay. Apple is forecast to take in 3.9 percent of spending, up from 3.8 percent last year.
No retailer comes close to Amazon in ecommerce. EMarketer pegs the company's share of online spending at roughly 48 percent. But Walmart's latest earnings show that's it making headway in areas where Amazon has been weaker, such as letting customers buy groceries online.
"Walmart's ecommerce business has been firing on all cylinders lately," eMarketer principal analyst Andrew Lipsman said in a blog post. "But more than anything, Walmart has caught its stride with a fast-growing online grocery business, which is helped in large part by the massive consumer adoption of click-and-collect."
Walmart posted profits of $1.7 billion on revenue of $124.9 billion for the third quarter, slightly higher than analysts expected. Sales at stores open at least a year rose 3.4, down from 4.5 percent at Walmart's U.S. division -- the latter figure marked its best performance in more than a decade. The measure, an indicator of a retailer's health, was boosted by a 1.2 percent increase in customer traffic and a 2.2 percent rise in transactions.
Since buying Jet.com for more than $3 billion two years ago, Walmart has been expanding its online business by acquiring brands and adding thousands of items. It's also been ramping up grocery delivery and pickup options. Grocery pickup is now offered at nearly 2,100 of its 4,700 U.S. stores, while grocery delivery is available in nearly 600 locations.
Walmart has also revamped its website to focus on fashion and home furnishings. That all helped to drive a 43 percent increase in online sales in the U.S. during the latest quarter.
"We're feeling confident going into this holiday season," Walmart U.S. CEO Greg Foran told the Associated Press last week. "I think the standards, the flow of merchandise, our pricing are feeling better than it was a year ago."
Under Foran, Walmart is creating a tech-powered shopping experience at its stores, while transforming them into more efficient distribution hubs that can fill online orders to reduce shipping costs and speed up deliveries.
Among other enhancements, customers can also use digital maps on their smartphone to help locate items in stores. Workers, armed with new apps on their mobile device, will also be able to manage routine tasks, freeing them to serve the customer or check them out in key areas of the store.
"We can provide a much better customer experience because we are in stock of the right item, at the right time at the same time it is going to help us be much more precise," Foran said.
Like other retailers, Walmart is benefiting from a strong job market and rising consumer confidence. Home Depot and Macy's raised annual profit expectations this week. They're also benefiting from the misfortunes of others. Toys R Us and Bon-Ton Stores have gone out of business, while the bankruptcy of Sears Holdings Corp. is creating more opportunities to grab sales.
In fact, in the free shipping arena, Walmart found itself the laggard during the start of the holidays. Target announced last month that for the first time it was getting rid of its $35 threshold for two-day delivery for the holidays. That move was followed by Amazon, which announced earlier in the month that it was going to make two-day shipping available to all shoppers including non-Prime customers, without the spending requirement of $25.
Amazon is also expanding its cashier-less physical stores, pushing Walmart and others to speed up checkout, a source of frustration for many shoppers. In time for the holidays, Walmart has rolled out a program that allows its staff to check out customers and provide receipts right on the spot in the busiest sections of the store.
But the first big test this holiday season is Black Friday weekend.
"If you run a good store, it's an event," said Foran, who will be on a plane from 2 p.m. to midnight on Thanksgiving visiting stores and monitoring the sales. "It's a proxy for stores. If you run good stores, people will want to go them."
-- CBS News' Irina Ivanova contributed reporting.
