Ecommerce driving growth for Walmart, Target and the US retail market
The American retail giant Walmart reported robust growth for Q2/2024. The e-commerce segment drove the growth. E-commerce in the US represented almost 45 % of all growth by the retail giant. The strong comparable growth of 4,2 % for the biggest business segment, Walmart US, was mainly driven by the 22 % growth of the e-commerce business. The e-commerce segment drove 300 basis points of the 420 basis point growth.
With $71,9 billion in revenues, e-commerce for Walmart US has become a massive business. The growth of the e-commerce business was led by store-fulfilled orders (pickup and delivery). Additionally, the new services within Walmart’s online platform (marketplace, advertising and memberships) drive profitability. They also outgrow the overall online sales with membership income up 23 %, advertising growing 26 % and membership counts growing by more than 50 %.
“eCommerce is compounding as we layer on pickup and even faster growth in delivery as our speed improves. Our newer businesses like marketplace, advertising, and membership, are also contributing, diversifying our profits.””
Despite being far behind Amazon’s absolute size of the online business, Walmart has grown to such scale that by keeping the growth momentum in place, the company can challenge Amazon in the long run. Online also helps keep offline businesses healthy as overall sales keep thriving.
Target returning to growth with digital growth
After a period of declining sales, Target's return to growth is a promising sign. The 2,6% growth, driven by a robust 7,5% comparable growth in the online channel, particularly through same-day services, underscores the significant role of e-commerce in Target's resurgence.
As store sales reported only a 0,7% comparable change, online represented 17,9% of all Target revenue during Q2/2024. For the Last Twelve Months (LTM), online represented 18,7% of all Target revenue.
According to Target CEO Brian Cornell, the rapidly growing same-day services ”account for more than 2/3 of our digital sales”. The Click & Collect service Drive up brought in more than $2 billion in revenue last quarter, accounting for almost half of all digital sales.
Overall retail growth also coming through e-commerce
Similarly to the two retail giants, the overall American retail market was driven by the growth of e-commerce. In Q2/2024, e-commerce was responsible of 52 % of all growth in the retail market. Store revenues grew by 1,9 %, whereas e-commerce revenues were up by 6,6 % in the year's second quarter.
Since Q3/2022, e-commerce revenue has outgrown that of physical stores. This difference in growth has pushed the e-commerce share of all retail revenue to 15,2%, almost as high as during the first peak of the pandemic lockdowns in Q2/2020 (15,5%).
For the Last Twelve Months, e-commerce has accounted for 15,7% of retail revenue, more than at any other time in US retail history. During the peak pandemic, online accounted for 15.3% of retail revenues.
E-commerce is the most significant growth opportunity for US retailers in the coming years. With the biggest companies (Walmart and Target) and the market getting the majority of their growth from e-commerce, the importance of e-commerce will continue to grow in the coming years.