Wal-Mart's e-commerce business: Can it move the needle, be material?

Summary:Global e-commerce sales were up 27 percent in the first quarter, but still account for just 0.3 percent of U.S. sales.

Wal-Mart is talking about e-commerce as a way to grow the retailer, but it's unclear how long it'll take to move the needle on the company's sales.

When Wal-Mart reported its earnings on Thursday it noted that global e-commerce sales were up 27 percent for the first quarter. But hard numbers take some remedial math and guess work.

The company said that e-commerce was 0.3 percent of U.S. sales of $67.85 billion, or $203.5 million. International e-commerce sales are lumped in with overall sales and largely remain a mystery.

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Nevertheless, Wal-Mart highlighted the following:

  • E-commerce is about .3 percent of U.S. sales.
  • "Our e-commerce business delivered double-digit sales growth and contributed approximately 30 basis points to total Wal-Mart U.S. comp sales," said Bill Simon, CEO of Wal-Mart U.S. "Approximately two-thirds came from the walmart.com fulfilled sales and the remainder from store fulfilled orders. We saw particular strength in home, hardlines, toys and seasonal, and apparel, which was somewhat offset by softer results in electronics."
  • E-commerce sales for Sam's Clubs are 0.2 percent of the first quarter sales pie of $12.2 billion excluding fuel.
  • In the U.K., Wal-Mart's Asda's Click & Collect online grocery home shopping business has a market share of more than 19 percent. E-commerce sales were up 19 percent in the first quarter. 
  • In China, the company's Yihaodian e-commerce effort saw traffic surge in triple digits and has 3 million items available. 
  • Wal-Mart will invest 2 cents a share to 4 cents a share of its earnings in e-commerce investments.

The most pressing issue for Wal-Mart is that it has to meld e-commerce with physical sales and generate a virtuous cycle. The jury will be out on Wal-Mart's ability to use e-commerce to turbo charge the overall business for the foreseeable future.

Topics: E-Commerce

About

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CN... Full Bio

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