Walmart (NYSE:WMT) stock isn’t commonly lumped in with growth stocks, but that’s starting to change.
Walmart is making some major strides that will disrupt the retail industry and massively increase its revenue and margins. Once it does, who knows how far WMT stock could run?
The Omnichannel Strategy and WMT Stock
The combination of Walmart stores and its e-commerce capabilities has been instrumental in gaining market share from competitors. With 90% of Americans living close to a Walmart store, they can order online and pick up products there, avoiding lost packages and having more control over their goods. Returning online purchases to Walmart stores is convenient for consumers.
To add to the strength of its omnichannel, Walmart offers Walmart+, a direct competitor to Amazon Prime providing free and same-day shipping (goods are delivered in as little as an hour).
Combining large stores with e-commerce has provided more flexibility for consumers. According to the company, customers who shop across both its in-store and online channels spend twice as much and shop in-store more.
Downloads for its app are closing in on two million (only slightly lower than Amazon but higher than Target, Costco, and BJ’s) demonstrating that Walmart is leading traditional retailers to digitize.
Apart from higher sales, omnichannel is crucial in helping Walmart cut down on costs: in-store pickups eliminate shipping costs and allow Walmart to use its existing stores to replace the cost of storing products in another warehouse.
Online Groceries and Ecommerce
Online groceries are a part in which Walmart shines. The market is growing fast at an 11.7% 5-year CAGR. With Walmart having one of the most efficient fleets in the industry, it’s able to offer the fastest delivery at the lowest cost, cementing itself as the biggest online grocer at 26.9%.
Walmart has become the second biggest e-commerce retailer in the US. They expanded e-commerce with a marketplace platform, benefiting over 95% of sellers.
Ecommerce provides a valuable opportunity for Walmart to expand to digital marketing, where the company can use its platform’s reach to sell advertisements.
Advertising business is a high-margin business (~70-80% margins) and this segment has seen tremendous growth (30% YoY) for Walmart.
The Bottom Line on WMT Stock
Overall, Walmart is fastly digitizing with significant upsides in terms of revenue and margins. Investors should keep the stock on its watch list as it offers the stability of a well-established company while seemingly offering amazing growth for the next decade.
On the date of publication, Michael Que did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
The researchers contributing to this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article
