Wal-Mart is pointing all its guns towards e-commerce
After today’s new record-setting market figures, starred by the Dow Jones Industrial Average, who had another record-breaking day for the 47th time this year after gaining 0.3% to end up at 22,830m, the public couldn’t be any more optimistic about the economic future of America.
Behind the curtains, setting the stage for this new market ceiling, Wal-Mart announced its plans to achieve a 40% growth in its e-commerce business by 2019.
This news, along with the announcement of a $20 billion share buy-back program, boosted the company’s stock prices by 4.47%, allowing the Waltons, the family who owns most of the retail giant, to pocket $5 billion in a single day. Perhaps you haven’t noticed, but they just earned the entire annual GDP of Sierra Leone in a market swing! Funny world, right?
The company is planning to step into Amazon’s territory even more, by using its massive physical infrastructure to offer customers nearby locations to pick up their online purchases, reducing the waiting period that is often involved in regular e-commerce transactions.
Charlie O’Shea, an analyst from Moody’s Corp., commented on the matter by saying: “We still believe Amazon’s lead in online retail is insurmountable; however, Wal-Mart continues to widen the gap between itself and all other brick-and-mortar retailers.”
In fact, this 40% doesn’t seem too far-off of what the company has achieved in the past, as Wal-Mart saw a 60% increase in its e-commerce business in the last two quarters, which is four times the average growth of the e-commerce industry in such period.
They are definitely pulling out the big guns on their online sales and investors are reacting positively to the strategy. The company is also planning to add 1,000 additional online-grocery locations, and they are reducing their pace of opening new physical facilities to focus on this digital strategy.
According to its forecasted figures, they are investing around $11 billion on both 2018 and 2019 combined, focusing most of the resources on enhancing their retailer’s supply chain.
Even though the online portion of Wal-Mart sales only represents a small percentage of their business as a whole, investors see this as a positive sign of the company’s capacity to adapt new environments. Nevertheless, it remains clear that Amazon is the undisputable king of the e-commerce land.
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