Shares of Walmart gained more than 3% on Thursday after the company posted better-than-expected earnings results. Despite a brutal industry landscape, America’s largest brick-and-mortar retailer is thriving thanks to its success in key segments.
One of the biggest takeaways from Walmart’s latest report is the growth of its e-commerce unit. In an effort to catch up to internet behemoth Amazon.com, Walmart has been pouring money into e-commerce, and it seems to be working. The company said that its e-commerce business saw gross merchandise volume skyrocket 69% in the first quarter.
Of course, Walmart can never hope to overtake Amazon as the e-commerce king. Amazon has had that crown for over a decade, and although Walmart’s recent online push has been a success, it was basically a do-or-die situation if the company wanted to maintain any legitimacy as a retail giant.
However, there are still several key emerging markets for e-commerce, and Walmart may just be dominating Amazon in the biggest of them all: China.
Sure, China isn’t really an emerging market anymore, and the country is no stranger to e-commerce. If anything, its domestic online retailers, such as Alibaba, present a threat to Walmart and Amazon as they move into Western markets.
Nevertheless, China is a relatively fresh market for American online retailers, and Amazon is really just starting to get a foothold in the nation of nearly 1.4 billion. In fact, Amazon Prime debuted in the country only seven months ago. At launch, Prime members in China could expect to get there packages in about 5 to 9 days.
And after Walmart’s earnings call earlier today, it looks like Amazon’s efforts in China might be futile.
According to Walmart chief executive Doug McMillon, the company recently started offering one-hour delivery service from 80 stores in China. The service is an extension of Walmart’s existing partnership with JD.com —the two companies previously debuted a two-hour delivery service last year.
“We can see the benefits of omni-channel retail even more clearly in China than any other country where we operate. Given the urban density and automobile traffic challenges, stores serve the triple purpose of in-store shopping, pickup and delivery most effectively,” said
JD.com falls behind Alibaba in terms of size, making it the second-largest Chinese e-commerce company. The Walmart-JD partnership was announced last summer, and JD now controls all of Walmart’s e-commerce operations in the country.
Interestingly enough, Walmart does not currently offer a one-hour delivery service anywhere in the U.S. Amazon does have a pretty well-established same-day delivery network, but it will be interesting to see if Walmart’s success in China inspires the company to make a similar play here on its home turf.