Online grocery top catalyst to Walmart U.S. e-commerce growth; content mandate pushed

Most headlines about the push by Wal-Mart Stores to grow e-commerce sales addressed acquisitions of online retailers, but the power behind the growth has been the expansion of the retailer’s online grocery initiative.

Wal-Mart U.S. e-commerce posted impressive sales growth numbers through the first half of this year with gross merchandise value (GMV) of U.S. sales rising 69% in the first quarter and 67% in the second quarter over the prior-year periods.

A new report by Slice Intelligence indicates Wal-Mart’s core divisions which included Jet were doing well before it purchased ShoeBuy, Moosejaw, ModCloth and Bonobos. The report indicates Walmart.com, Walmart online grocery and Samsclub.com posted combined online sales growth of 69% between January and March, and 73% the following three months. (The calendar quarters don’t line up with Wal-Mart’s fiscal earnings calendar which lags one-month behind.)

Ken Cassar, principal analyst at Slice, said in the report Walmart’s online grocery has been the most important catalyst of growth for the retail giant with pickup locations going from just a few stores to at least 1,000. The Slice report indicates Walmart online grocery accounted for 26% of the Walmart U.S. sales online in June which was more than Sam’s Club and Jet combined. That metric has improved from just 8% or so a year ago. Walmart online grocery sales nearly tripled in the past year, while SamsClub.com  and Jet sales are smaller in relation to the retailer’s overall U.S. e-commerce sales.

Cassar said even through Walmart U.S. is growing online sales it has a long way to catch Amazon. In June 2017, Walmart’s U.S. sales (including Walmart.com, Walmart Grocery, Jet, Sam’s, Modcloth, and Bonobos) account for only 8% of Amazon’s U.S. sales. He said in the past year Walmart U.S. has raised that metric from 6% of Amazon’s sales, small but not insignificant, because it “clearly solidifies Walmart as the top alternative to Amazon for those looking for options. And suppliers to Amazon are looking for alternatives in order to mitigate Amazon’s power in the market, which is outsized in virtually every category where Amazon competes.”

Casser said the encroachment of Walmart grocery on Amazon’s effort to expand that market might have played a role in Amazon’s decision to acquire Whole Foods rather than try to organically grow Amazonfresh Pickup.

“We also believe that the combination of Walmart Grocery growth and the Amazon Whole Foods tie-up make it immediately imperative for all non-specialty grocers to kick their e-commerce strategies into high gear. For the food brands that have gotten into the habit of focusing their e-commerce time and attention on Seattle, I’ve got three letters that ought to become increasingly familiar to you: XNA. That’s the airport code for Northwest Arkansas Regional Airport,” Casser concluded in the report.

The Slice report was made available to Talk Business & Politics after participation in a marketplace webinar on Wednesday (Sept. 20) hosted by RetailWire. Casser spoke on the role of marketplaces in e-commerce during that session. Also Wednesday, the Greater Bentonville Chamber of Commerce held its inaugural Wal-Street Fireside Chat, which was an intimate gathering of suppliers to Wal-Mart to hear from a panel about the importance of content in retail regardless of what channel or which products are sold.

CONTENT IS KING
J.P. DeVilliers, director of content acquisition at Walmart, said Wal-Mart has about 100,000 items in its stores that are not yet available online. He said some of that is seasonal, but getting a complete catalog of items is becoming more crucial because around 76% of purchases in stores begin online. DeVilliers said his biggest mandate is to get as many supplier items as possible uploaded online and that has to start with complete, unique and accurate content.

“We pay a lot of money to advertise your products online, but it’s futile if Google doesn’t recognize it because of faulty content, then shoppers will not be able to find it,” he added.

Eric Howerton, CEO of WhyteSpyder, also a panelist, said Google robots have to recognize the content as unique and genuine, which means accuracy, relevancy and details are key to being spotted by Google. He said to complicate the process, the algorithms are changed often which makes it necessary for suppliers to update and refresh online content or risk dropping in the Google search rankings. He said it takes about six weeks for content to be indexed by Google. When asked how often suppliers should refresh their content, he said once a month is a good benchmark to be head of the class, but the frequency will likely increase as more suppliers and products go online.

Panelist Matt Harp of Acosta said it can be a daunting task for suppliers given the amount of content Wal-Mart wants. But it’s imperative suppliers have a base setup game plan. He recommended starting with the most popular items sold in store and ramping up the content on those items so there is a consistent message for shoppers about the brand and product regardless of how they chose to buy it.

Panelist Mary Heman, director of shopper marketing at MaxPoint, told the group to think about who consumers get their information from and various devices a single household might use to get online. Heman said suppliers also need to think about having the right messaging for the audience they are trying to reach.

“The consumer is looking for information – consistency is important and the mobile imaging needs to look like shelf,” she said.

DeVilliers said much work is needed to improve online content at Wal-Mart. Wal-Mart is hiring category managers who are revamping content style guides which continue to change. He said the retailer is working in more cross-functional teams that includes buyers and merchandisers because content is no longer just relegated to marketing teams. He said great online content involves science and art. He told suppliers they could work with category managers at Wal-Mart to help them with content, but waiting is not an option given the mandate.