Walmart Plans to Expand E-Commerce - Analyst Blog

As per media reports, Wal-Mart Stores Inc. WMT plans to accelerate the pace of acquisitions in the e-commerce space in order to better compete with digital rivals such as Amazon.com, Inc. AMZN.

The CEO of this retail giant recently stated at the Code Conference that Walmart might buy 3-D printing companies as it believes that the technology could be used in stores and in distribution centers to quickly print new products and speed up shipments. Walmart has also tested 3-D printers at its stores.

Walmart's e-commerce business has been performing quite well owing to rising demand. It has already developed price optimization tools, improved its mobile applications and developed a new search engine available on its websites.

E-commerce sales grew over 30% to more than $10 billion, including acquisitions in fiscal 2014, while it contributed approximately 30 basis points to total Walmart U.S. comps in the fourth quarter of fiscal 2014. Walmart is thus focused on continued enhancements to its e-commerce platform through improved apps.

The company has made 12 acquisitions in the e-commerce business in the last three years, with the latest acquisition being that of Adchemy last month. It is a search-engine marketing company that helps retailers optimize the use of search terms.

In 2013, Walmart acquired four companies — Torbit, OneOps, Tasty Labs and Inkiru — that build tools to compress data and speed up websites. Walmart's acquisition of a 51% interest in Newheight Holdings Ltd, a holding company that owns Chinese Internet retailer Yihaodian in Aug 2012 has strengthened its presence in the Chinese market.

Walmart expects to grow global e-commerce sales to over $13 billion in fiscal 2015, with continued focus on the U.S., U.K., China and Brazil. The websites in Canada and Mexico are doing well and the company continues to invest in Pangaea, its global technology platform, in order to drive sales across the retail websites in the U.S., the U.K. and Brazil.

Walmart has been struggling of late with disappointing performances in all the four quarters of fiscal 2014. Thus, the company is seeking new ways to boost revenue amid macro-economic headwinds like budget-strained customers, reductions in government benefits, higher taxes, tighter credit and higher group healthcare costs.

The move to expand its e-commerce business will surely help the company to combat a sluggish revenue environment. Walmart currently holds a Zacks Rank #4 (Sell).

Other better-ranked retailers include Ingles Markets, Inc. IMKTA and The Kroger Co. KR, both of which hold a Zacks Rank #2 (Buy).