With shares rising 3% to $71.45 on Tuesday, Wal-Mart Stores Inc. drew more shoppers to its stores in the US and its online sales soared 29% in its fiscal fourth quarter, which covers the crucial holiday shopping season. Like other traditional retailers, Wal-Mart has been trying to improve its online operations to challenge Amazon, which accounted for 33% of total US online sales last year, according to the research firm Euromonitor. Wal-Mart moved into second place last year ahead of EBay Inc., accounting for 7.8% of online sales, up from 7.4% in 2015. Still, Wal-Mart’s online sales account for only about 3% of its global sales, or about $14 billion. That compares with $94 billion in global net product sales for Amazon.com.
Moving closer to the terms of Amazon’s powerhouse Prime program, Wal-Mart is now offering free two-day shipping on online orders of its most popular items with a minimum purchase order of $35. Amazon Prime costs $99 a year, but it comes with services such as streaming music and video.
Wal-Mart executives said Tuesday that shoppers are responding well to the two-day shipping program. In a move to rival Wal-Mart’s latest tactic, Amazon, however, quietly posted on its website over the weekend that it was dropping threshold for free shipping for non-Prime members to $35 from $50. But that applies to standard shipping of five to eight days, not two-day delivery.
The holiday shopping season was tough for many retailers, underscoring the changes they need to make. Macy’s reported another quarter of sluggish sales, even as it has been scrambling for new ways to bring shoppers in and beef up online services. And Target Corp., one of Wal-Mart’s main rivals, warned last month of weak sales for the holiday season. It reports final figures next week.
“We’re moving with speed to become more of a digital enterprise and better serve our customers,” Chief Executive Doug McMillon said in a statement.
In 2016, Wal-Mart spent over $3 billion for Jet.com in a deal aimed at helping it attract younger and more affluent customers. Since then, it bought online footwear retailer ShoeBuy.com for $70 million and the outdoor and gear seller Moosejaw for $51 million. Last year, Wal-Mart also raised its stake in JD.com, China’s No. 2 e-commerce site.
On Tuesday, Marc Lore, the Jet.com founder who is now CEO of Walmart.com, said that the company is still looking for new start-ups to buy. Under Lore, the company has quadrupled the number of items available on its third-party online marketplace to more than 35 million.