- Walmart‘s Click & Collect feature has its e-commerce growing faster than Amazon’s.
- Click & Collect is driving loyalty and more visits to Walmart stores.
- Walmart’s comparable grocery sales, its largest category, grew impressively in the second quarter.
- Watch Walmart’s trade in real-time here.
Walmart’s e-commerce business is growing faster than Amazon’s thanks to a big boost from its Click & Collect feature, which allows customers to order online and pick up in store without delivery fee.
“C&C is clearly driving loyalty and greater frequency to Walmart stores,” Simeon Gutman, Morgan Stanley’s analyst wrote in a note sent out to clients on Monday.
“Walmart’s Click & Collect service is now available in 1,800 stores, up 100% from a year ago. Based on our checks, a Supercenter can handle 90 pickups per day, with some capable of 120. The feedback from stores and customers has been consistently positive.”
Walmart is also providing improvements on Click & Collect services based on customer’s feedback such as helping loading grocery items into consumers’ cars and adding lockers that will hold larger items like flat screen televisions.
By Gutman’s calculation,Walmart’s second-quarter Click & Collect growth was 20-22%, or about half of the 40% total e-commerce growth it saw. By comparison, Amazon’s global Gross Merchandise Volume growth was 19%.
Walmart’s comparable grocery sales, its largest category, grew 4.5% in the quarter ended in June, compared with the grocery retail sales growth of 3.3%. Given that Walmart already had a 20% to 25% market share in grocery, this impressive share gain suggests that Walmart is growing sales in both stores and online, and is gaining new customers, Gutman said.
He warned, however, that Click & Collect could be a double edged sword as it’s accretive to sales but dilutive to margin. And also, in the context of the investment narrative for Walmart, which is a burgeoning e-commerce business, chasing Amazon and sporting a multiple well in excess of its growth, 20% core sale growth could be viewed as disappointing.
Gutman has a $US98 price target and “equal-weight” rating. Walmart shares are little changed this year.
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