Walmart's grocery collection attracts a different category of customers

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "The online grocery order was a huge success for Walmart (NYSE: WMT). The retailer is rapidly expanding grocery collection to more locations, with plans to reach 3,100 stores by the end of the year, compared with 2,450 stores currently offering this service. Digital sales, meanwhile, continue to climb and increase by 37% compared to the first quarter of last year. "Data-reactid =" 11 "> Grocery orders online have been a huge success for Walmart (NYSE: WMT). The retailer is rapidly expanding grocery collection to more locations, with plans to reach 3,100 stores by the end of the year, compared with 2,450 stores currently offering this service. Digital sales, meanwhile, continue to climb and are up 37% from the first quarter.

<p class = "canvas-atom web-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "The management called the grocery store online at make a decisive contribution to online sales growth in the first quarter earnings commentary: by next year, groceries could account for 33% of Walmart's digital sales, according to Cowen and Company analysts cited in a report of Diving of groceries. the strength of online grocery sales is particularly surprising considering Amazonof (NASDAQ: AMZN) data-reactid = "12"> Management said that the online grocery store was one of the major contributors to the growth of e-commerce in its first quarter results. Early next year, According to Cowen and Company analysts cited in a Grocery Dive report, the grocery could account for 33% of Walmart's digital sales. The strength of online grocery store sales is particularly surprising if we consider Amazonof (NASDAQ: AMZN) efforts made in the last two years after the acquisition of Whole Foods Market.

But Walmart's efforts not only put an end to Amazon's impact on its largest business, they have attracted new retailer customers who spend more per trip than in-store grocery buyers.

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Image Source: Walmart

<h2 class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Better than Prime?"data-reactid =" 26 ">Better than Prime?

Amazon has taken several steps to incorporate Prime and Whole Foods to offer more online grocery options to its customers. Premium members can take orders online from Whole Foods in 30 markets. Amazon also offers these customers free shipping; Walmart charges $ 9.95 per delivery.

However, Walmart was able to leverage its extensive physical store network to allow customers to place orders in approximately 2,450 stores and deliver to more than 1,000 stores. By the end of the year, Walmart will offer grocery shopping to approximately 80% of the US population and deliver to approximately 50% of households.

This makes Walmart a more attractive option for most consumers in the country. In fact, according to Numerator data, 65% of Walmart's online grocery orders come from Premium members. Indeed, Walmart has managed to repel Amazon's efforts to encroach on the bulk of its business by creating an attractive service at an attractive price.

<p class = "canvas-atom-text-canvas Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "To be sure, Walmart's efforts in the field of online grocery store had a negative impact on profit margins. He offers similar prices in store and online, but he has to hire staff to pick items from the shelves, pack them into bags and bring them to cars. It does it without charge. The move is very cheap and it is certain that sales have increased. "Data-reactid =" 30 "> True, Walmart's online grocery shopping efforts have had a negative impact on its profit margins – in stores and online, but it needs to hire staff to pick up the items on the shelves, pack them in bags and bring them to the cars.It does it for free – the move is very bezos-esque and has certainly borne fruit of larger sales.

<h2 class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Attract new customers"data-reactid =" 31 ">Attract new customers

Walmart's online grocery store has attracted many buyers for the first time. According to Cowen and Company, between 40% and 60% of pickup orders come from new customers. Not only that – these customers are big spenders. The average online grocery order amounts to almost $ 125. This compares to just under $ 50 for a typical in-store shopping cart, according to Numerator data.

It seems that Walmart is successfully attracting a new category of customers who are more interested in value and convenience than in the lowest price. It's the same type of customer that can subscribe to Amazon Prime and spend more if it's appropriate.

While online grocery sales could hurt Walmart's profit margins, attracting new customers has certainly helped. The gross margin was better than expected in the first quarter as the company saw a better mix of merchandise and better overall e-commerce margins. Not to mention comparable sales rose 3.4% in the first quarter, the highest level in nine years.

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