Walmart and Target Earnings Offer Up a Tale of Two eCommerce Platforms

At first glance, the numbers are startling in their contrast.

In their latest earnings reports, Walmart posted comparable eCommerce sales gains of 27% in its most recent quarter. Target posted a 3.4% drop in comparable digital sales.

“We continue to gain market share in the grocery category, including with higher income and younger shoppers, and we saw good growth in membership income in both businesses,” said Walmart CEO Doug McMillon.

Target’s year-on-year drop came as consumers pulled back on discretionary items, though its comparable traffic was up 0.9%. CEO Brian Cornell said that consumers chose “more in-store visits,” adding that the boost in traffic spurred in-store sales growth to outpace digital, in a trend seen over the past several quarters.

Omnichannel Demand

But there are some commonalities in the mix, where both firms are seeing demand for omnichannel flexibility — and to get goods delivered to the doorstep or to pick them up curbside.

But even within digital, said Target’s Cornell, same-day services saw a 5% bump, while stores fulfilled 97% of sales.

Walmart CFO John Rainey said on the call that the expansion of its online marketplace in the U.S., where seller counts increased by 40%, year on year, comes as the firm is adding “higher-profile, in-demand brands that our customers are searching for but not typically distributed at Walmart, elevating our profile as a digital shopping destination.” India is also seeing eCommerce growth as Flipkart scales, in Rainey’s words, “growing first-time eCommerce customers and expanding its reach in Tier 2 and Tier 3 cities.”

Management said on the call that eCommerce sales were led by double-digit growth in store-fulfilled pickup and delivery — a shift that has been aided by the proximity of stores to fulfill and deliver digital orders to households. Sam’s Club eCommerce sales were up 19%, led by strong growth in curbside.

John Furner, president and CEO, Walmart U.S., said on the call that the marketplace seller expansion has helped spur eCommerce growth as there is a greater “assortment delivered in one or two days. And we see a pretty significant increase in conversion rates when a seller is using fulfillment services and can deliver within two days.”

Within eCommerce, he said, there’s been demand for general merchandise, apparel and some categories of home furnishings. Walmart’s marketplace traction has been mirrored in the data from eCommerce arch-rival Amazon, where our own earnings coverage noted that third-party sellers were tied to just about 60% of the company’s sales.

Separately, PYMNTS data this week noted that eCommerce share of retail spending is firmly on the upswing, at about 22% in the first quarter of this year, up from 21% in recent readings. The 22% we’ve estimated, using a wide range of government sources, is greater than the 15% reported by the Census Bureau data.