From lower e-commerce fulfillment expenses to densifying the last mile, Walmart has improved its e-commerce profitability, giving Amazon solid competition.
During its earnings call earlier this month, CFO John Rainey detailed the company’s improvement in its e-commerce profitability in the American market.
Comparing Walmart with Amazon
Like what Amazon has done to get products closer to customers, Walmart has found a way to cut home delivery costs by 20%. “Our store proximity to customers is an advantage as we increasingly use stores to fulfill e-commerce orders,” says Rainey.
He explains that while managing to “shorten delivery times to same-day (delivery) from around 90% of stores,” they also lowered the last-mile store-to-home delivery costs in the last year.
Comparing this to Amazon’s strategy, it decided to “operate with eight regional hubs” to help the e-commerce giant get items closer to customers. It resulted in faster turnaround times for same-day deliveries.
According to The Street, Walmart is going toe to toe with Amazon in the same-day, next-day, and two-day delivery options. They don’t have nearly the same selection of products to compete with Amazon, but Walmart is nevertheless throwing billions at the problem to keep up with the pace.
Exceeding expectations
Rainey says combining the fulfillment efficiencies with improved product margins of e-commerce “far exceeded the 200 basis point goal” they outlined at their last investors meeting. They also managed to lower e-commerce losses by more than 40% compared to the previous year.
Overall, Walmart’s global e-commerce sales grew by 23% in the final quarter of 2024.
CEO Doug McMillon says they are “redefining convenience,” which he believes is also building customer trust. “We’re growing our competitive advantages through investments in people-led technologies.”
The giant retailer crossed $100 billion in e-commerce sales in the fourth quarter.
Walmart investing in people and technology
While Walmart is focusing on that thin line of balancing people and technology, the giant retailer emphasizes that it strives to be a “leader in sustainability, corporate philanthropy, and employment opportunity.”
This week, logistics expert and Solving Work CEO Jessica Windham said “people are the foundation, and technology cannot substitute culture.” This rings true for Walmart, as it’s trying to strike that exact balance.
As Walmart continues investing in its workforce and cutting-edge technologies, the giant retailer remains at the forefront of the e-commerce industry. Its online presence is performing well, with approximately 255 million customers and members visiting approximately 10,500 stores and numerous e-commerce websites in 19 countries.
The dynamics in logistics keep on changing at a rapid pace, dictated by consumer trends and spending behavior. While Amazon and Walmart keep adapting their strategies, both are perfect examples of experimenting and making bold changes to combine technology capabilities and human resources.
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