Once again, Walmart (WMT) has reported strong quarterly sales growth for its U.S. e-commerce operations. And once again, some of the headlines that have followed about the implications of this growth for Amazon.com (AMZN) need to be taken with a grain of salt.
In its favorably-received April quarter earnings report, Walmart said that U.S. e-commerce sales for its Walmart and Sam's Club segments grew, respectively, 37% and 28% year over year. The performance of the Walmart segment's e-commerce operations, which are believed to be much larger than those of Sam's Club, are said to reflect "strong growth in online grocery, as well as the Home and Fashion categories on Walmart.com."
The business' 37% growth in the April quarter comes on the heels for 43% January quarter growth. However, Walmart still isn't sharing actual revenue numbers for its e-commerce units -- nor is it sharing what percentage of their sales involve Walmart's increasingly popular grocery pickup services. Consequently, it's quite likely that a significant portion of Walmart's grocery pickup sales, as well as some portion of its standard e-commerce sales that involve groceries and other household goods, would have taken place at physical Walmart stores if online ordering wasn't an option.
Meanwhile, research firm eMarketer has forecast that Walmart will account for just 4.6% of U.S. e-commerce gross merchandise volume (GMV) in 2019, in spite of growing GMV by 33%. For comparison, Amazon is expected to have a 47% U.S. GMV share, and eBay (EBAY) a 6.1% share.
Amazon is is coming off a Q1 in which its North American segment -- it covers all of its North American operations outside of AWS -- grew 17% to $35.81 billion. The segment's e-commerce GMV growth was likely a little higher, given that the segment includes Whole Foods' physical retail sales, and that Amazon's marketplace sales, which are monetized via revenue streams such as commissions, fulfillment services and ads, have long been growing faster than its direct e-commerce sales.
In addition, Amazon, whose Prime subscriber base appears to have a much higher average household income than Walmart's customer base, is pushing ahead with efforts to grow the reach of Whole Foods' grocery pickup and delivery services. It is also reportedly planning to launch a line of low-cost grocery stores that would be separate from Whole Foods. Amazon is also less than a month removed from announcing plans to make one-day shipping the norm for Prime orders.
Walmart, to be fair, recently countered by announcing it plans to offer one-day delivery for many items (provided a $35 order minimum is hit) to about 75% of the U.S. population by year's end. However, given the scale and efficiency of Amazon's giant fulfillment and logistics infrastructure -- an infrastructure that unlike Walmart's was built solely with e-commerce in mind -- as well as its ability to subsidize shipping costs via Prime membership fees, Amazon looks better-positioned to profitably support one-day shipping on a large scale.Last but not least, at a time when e-commerce is still believed to account for less than 15% of total U.S. retail volume even after excluding items such as cars, fuel and restaurant orders, there's room for both Amazon and Walmart to prosper here. While Amazon can't ignore Walmart's recent e-commerce traction, there's little need for Jeff Bezos' firm to panic over it at this point either.