wordpress blog stats
Connect with us

Hi, what are you looking for?

How Walmart adapted to meet a spike in COVID-related online demand in the US

Walmart’s massive network of stores in the US helped it scale e-commerce operations as demand for certain goods spiked amid the COVID-19 pandemic. The company said its US e-commerce sales shot up 74% over last year. To meet the spike in demand, it quickly converted 2,500 of its stores into fulfilment centres. The company also took other strategic steps including combining its online apps, launching new delivery options, and more importantly, by shutting down Jet.com, which it had acquired for over $3 billion in 2016. Walmart possibly decided to shutdown Jet because it lost about $2 billion on its online e-commerce operations last year, according to the Wall Street Journal.

Walmart CEO Doug McMillon, during a call with investors, said since mid-March, when social-distancing rules went into effect in the US, the company has seen four times as many new customers as normal trying delivery or pickup of online orders; and many of them are becoming repeat shoppers. The company said store pickup and delivery spiked in March and remained elevated in April with sales growth of nearly 300% at peak. Growth in marketplace outpaced the overall business even as first-party sales were strong.

Key steps Walmart took to meet surge in online demand

“Customers are gravitating towards store pickup and delivery, driving record demand for these services leading to triple-digit growth in U.S. e-commerce sales during peak periods,” CFO Brett Biggs said, and added that the strategy of offering users multiple channels to order from has proven to be important. To keep that going, the company accelerated investments in omni fulfilment solutions, increased ship from store capabilities, hired significant number of personal shoppers, expanded pickup slots, and launched Express Delivery, all within a matter of weeks. Express Delivery allows for delivery in under two hours, and currently picks orders from a thousand of Walmart’s stores, with the company planning to double that by the end of June.

Combining its 2 mobile apps into 1: Another thing the company did to reduce friction in online sales was to bring its Walmart Grocery — which the number one online grocery app in the US on the App Store — and Walmart App into one single app. This way, the company said, it will be able to service customers from fulfilment centres, from stores, or from picking up in stores. People can now choose to do grocery pickup from the store or order from walmart.com using the one single app. “We’re going to end up with an omni-channel business and it’s going to serve customers in a way that they want to be served, “ McMillon said. The company still needs to figure out things from a supply chain point of view, where to route orders through, and how much to pay people, among other things to make that possible, he said.

Cutbacks: It was not to say that the company didn’t take some strategic decisions to keep operating costs down. It reduced expenses in areas outside of the stores and clubs, like hiring at store level, management consulting services and travel. More importantly, Walmart discontinued Jet.com. However, Walmart said that the Jet acquisition was critical to its omni strategy. Walmart also delayed certain consulting projects, reduced marketing, prioritised capital and has frozen most new corporate hiring.

Advertisement. Scroll to continue reading.

Walmart’s omni-strategy: Going forward, “we are going to sell a broad assortment across merchandise categories and services to customers,” McMillon said, and added that as customers come to their stores for picking up orders, and as Walmart delivers to their home, the company will design and execute a supply chain underneath that, that uses all of Walmart’s assets. “So, there’ll be times when it makes sense for an order to go straight from a fulfilment centre based on what that order is comprised of, there’ll be other times where that may be split between stores and fulfilment centres,” he explained.

Trends in consumer behaviour and how that affected Walmart’s supply chain

In the U.S. for instance, as the pandemic spread, sales shifted heavily towards food and consumables. During this time, the company experienced unprecedented demand in categories like paper goods, surface cleaners and grocery staples. It was selling a lot of these commodities in 2-3 hours as much it would have sold in 2-3 days.

As more people started staying home, Walmart saw growing demand for items related to entertainment, education, video games, and DIY kits, among others. Adult bicycles started selling out, and people started buying items like bandanas and sewing machines. Walmart’s home offerings at stores and online also took off. Then, towards the end of the quarter, the company saw some amount of relief spending “heavily influenced by stimulus dollars”, which led to sales increases in categories such as apparel, televisions, video games, sporting goods and toys. Customers consolidated shopping trips and purchased larger baskets in stores, which drove the ticket price by about 16%, and decreased number of transactions by about 6%. E-commerce sales meanwhile contributed approximately 390 basis points to segments, and pickup and delivery services “continue to run historically high volumes”.

Effect on supply chain: The spike in demand, however, stretched Walmart’s supply chain, by the company’s own admission. Not only did products such as hand sanitisers, disinfecting wipes and sprays, toilet paper, beef and pork become hard to find, but items such as laptops, office chairs and fabric were cleared out in some of its stores and online.From an inventory standpoint, the company ended the quarter down about 8%. In fact, the company had to “pull some demand down because we weren’t able to fill the orders due to in-stock”, but was able to recover that in April. It has been adding slots so more customers can be served with its online pickup option.

Owing to the pandemic, Walmart faced other sets of challenges globally including varying government regulations, significant sales variability, mix shifts and channel shifts due to changing consumer habits. All of this led to significantly higher than anticipated sales, but lower gross margin rates and higher expenses, the company said. Unlike the US where, where e-commerce surged for Walmart, In India, Flipkart experienced significant sales decline, as business was limited by government regulation to selling only essential items for several weeks.

The company is also expecting additional expenses going forward, including, sanitation, and cleaning in the stores. The company will also try and make sure that it always remains in stock, and is able to get everything out of the floor, which can potentially add to expenses in the second quarter. The company also has plans to make some investments later in the year, but given current circumstances, will make that decision about it at the right time.

Advertisement. Scroll to continue reading.


  • Revenue: $134.6 billion, an increase of $10.7 billion over last year
  • Consolidated operating income: $5.2 billion, an increase of 5.6% YoY
  • Net sales: $88.7 billion, an increase of 10.5% over last year
  • E-commerce sales: grew 74% compared the same quarter last year


Download: Financials | Presentation | Earnings Call Transcript

Written By

MediaNama’s mission is to help build a digital ecosystem which is open, fair, global and competitive.



Due to the scale of regulatory and technical challenges, transparency reporting under the IT Rules has gotten off to a rocky start.


Here are possible reasons why Indians are not generating significant IAP revenues despite our download share crossing 30%.


This article addresses the legal and practical ambiguities in understanding the complex crypto ecosystem in India.


It is widely argued that the PDP Bill report seeks to discard the intermediary status of social media platforms but that may not be...


Looking at the definition of health data, it is difficult to verify whether health IDs are covered by the Bill.

You May Also Like


Google has released a Google Travel Trends Report which states that branded budget hotel search queries grew 179% year over year (YOY) in India, in...


135 job openings in over 60 companies are listed at our free Digital and Mobile Job Board: If you’re looking for a job, or...


Rajesh Kumar* doesn’t have many enemies in life. But, Uber, for which he drives a cab everyday, is starting to look like one, he...


By Aroon Deep and Aditya Chunduru You’re reading it here first: Twitter has complied with government requests to censor 52 tweets that mostly criticised...

MediaNama is the premier source of information and analysis on Technology Policy in India. More about MediaNama, and contact information, here.

© 2008-2021 Mixed Bag Media Pvt. Ltd. Developed By PixelVJ

Subscribe to our daily newsletter
Your email address:*
Please enter all required fields Click to hide
Correct invalid entries Click to hide

© 2008-2021 Mixed Bag Media Pvt. Ltd. Developed By PixelVJ