Looking at 40% year-over-year online sales growth for Walmart through 2018, you would think all is rosy for the retail giant. However, even retail giants can experience growing pains. And Walmart is no exception.
With growth comes investment, leading to lower profits. Granted, the investments are for the long term benefit of the company, but in the short term investors aren’t happy.
“Our previous investments in fulfillment centers and systems, plus our acquisitions are helping us drive strong sales, but we need to make more progress to improve profitability”Walmart CEO, Doug McMillon
Walmart CFO Brett Biggs noted that gross margins for the online sector were down 21 basis points, largely based on the growth of e-commerce in the U.S. and India (remember the costly FlipKart acquisition) along with “price investments in certain markets.”
Among other technology-based investments, delivery options have been a major area of investment for the company, including efforts to tackle the “last mile” phenomenon associated with customer delivery.
Bottom line is this: Amazon is officially on notice that Walmart has learned how to capitalize on the brick and mortar arsenal, and are making heavy capital investments to increase market share in the very near future.
I personally love the battle! What are your thoughts?