Is Wal-Mart Stores Inc (NYSE:WMT) Well-Positioned To Give Enough Headaches To, Inc. (NASDAQ:AMZN)?

Is Wal-Mart Stores Inc (NYSE:WMT) Well-Positioned To Give Enough Headaches To, Inc. (NASDAQ:AMZN)?


After Wal-Mart Stores Inc (NYSE:WMT) delivered strong e-commerce sales growth in the first quarter, the uppermost question among investors is whether company is well-positioned to take on the mighty, Inc. (NASDAQ:AMZN). The online retailer has remained king since its beginning and strengthened its position every year. While everyone felt that there is no one to question its supremacy, the biggest retailer has come up with strong numbers in the last two quarters.

Wal-Mart Stores delivered 63 percent jump in online sales during the first quarter. The most significant factor is that the growth rate is more than doubled from 29 percent recorded in the seasonally strong fourth quarter. In the year-ago quarter, the company could achieve a growth pace of only 7 percent. Therefore, it is quite clear that the world’s biggest retailer’s online sales uptick cannot be ignored by Amazon. That would mean there will be enough headaches in the upcoming period to retain its position.

Though Amazon has other businesses in its control like Amazon Video, Amazon Prime, Amazon Web Services, the company is also eyeing pharmacy business. This is an obvious attempt to expand its market place to retain its stronghold in the online retailing segment. In any case, Wal-Mart is giving a run for money to the online retailer when it comes to online shopping.

Following is the data on online sales and gross merchandise value during the preceding four quarters:

  • In the fourth quarter, Wal-Mart’s e-commerce growth was 29.0 percent while gross merchandise value jumped 36.1 percent. This included online grocery, as well as, that was acquired in the third quarter.
  • During the third quarter, the biggest retailer’s online sales and GMV witnessed a growth of 20.6 percent and 16.8 percent respectively. Excluding Yihaodian, GMV would have increased 28.6 percent.
  • In the second quarter, the company’s e-commerce sales and GMV recorded an uptick of 11.8 percent and 13.0 percent respectively.
  • During the first quarter, online sales and GMV witnessed a growth rate of 7 percent and 7.5 percent respectively.

Aside from all these things, Jim Cramer, believes that Wal-Mart has everything to become a serious competitor to Amazon. He cited the conference call details that pointed out that company is offering 50 million products current compared to 35 million in the last quarter. This also represented 10 million more than the year-ago period.

However, it would not be an easy task for Wal-Mart to beat Amazon though it can play a spoilsport in other retailers’ performance. The biggest retailer may have to just follow the online retailer in bricks and mortar to eliminate underperforming retailers.

At time of writing this, Wal-Mart shares are trading up 0.27 percent in pre-market on Friday whereas Amazon managed a gain of 0.46 percent.