Walmart Inc. (NYSE:WMT) is adapting well to changing customer shopping behaviors, going by its third-quarter financial results. Stronger than expected earnings came as the nation’s largest retailer focused more on online sales in response to changing shopping patterns. Online sales were up 79%, thanks to increased spending on electronics, apparel, and groceries.
Focus on Online Sales
With the new customer behavior expected to persist, Walmart remains well-positioned to serve customers and shrug off competition from other e-commerce players. The e-commerce trend is expected to persist as the COVID-19 pandemic continues to affect traffic into brick and mortar stores.
A spike in infection rates that threatens new lockdowns for the holiday season has forced Walmart to bolster its operations on online sales and pick up locations. Even as traffic to brick and mortar stores slowed, Walmart was still able to post a 5.2% increase in revenue that came in at $134.7 billion. Adjusted earnings, on the other hand, increased by 15.5% to $1.34 a share.
Revenue growth could be attributed to, among other things, shoppers consolidating store shopping trips with significantly larger average baskets. However, purchases on the company’s website remain the key driver of sales. Likewise, the grocery pick-up and delivery posted the highest sales volume in the quarter as Walmart offered its pick up service at 3,600 locations and same delivery service in approximately 2,900 stores.
Walmart Outlook
The retailer's pick-up services and same-day delivery options are the biggest revelations in a year where COVID-19 has disrupted traffic into stores. With the two offerings, Walmart has been able to compete against other e-commerce heavyweights, conversely, offsetting decline in brick and mortar traffic. The newly launched Walmart-Plus service also registered solid gains in the quarter.
In response to the changing retail landscape, Walmart inked a strategic partnership with Zipline and DroneUp as part of a new drone delivery service. The company is looking to use drones to deliver items as part of its same-day delivery service. The company is also engaged in a pilot program with Cruise, testing the use of electric self-driving car for grocery delivery.