Wal-Mart Stores Inc (NYSE:WMT) is back on investors’ radar amid sterling performance and rapid ecommerce initiatives. The company which was being regarded as obsolete in the ecommerce area by several analysts a few months ago is turning the tables on Amazon. Walmart shares are up over 18% over the last 6 months, compared to Amazon shares which have gained 15% in value in the same period. President of Quo Vadis Capital, John Zolidis, recently said that Walmart’s major advantage over Amazon.com, Inc. (NASDAQ:AMZN) is the rising grocery inflation in the US. Walmart earns 55% of its revenue from groceries in the US. Zolidis also likes Wal-Mart Stores Inc (NYSE:WMT) rising same store sales. He thinks that is “increasingly optimistic” that Walmart can be an “effective” competitor to Amazon.
Wal-Mart Stores Inc (NYSE:WMT) ecommerce business is posting a meteoric growth. In the most recent quarter, revenue from online sales surged by 60% year-over-year.
It is also ramping up its digital advertising to compete with Amazon in the mobile ads segment. Walmart website has started to show third party banner ads more frequently. These ads have links to product pages. This shows that Walmart has started opening up to third-party brands and websites. In the past, Walmart used to show ads that were directing only to the products sold on Walmart’s platform.
KeyBanc’s analyst Ed Yruma noted in a reported recently that Wal-Mart Stores Inc (NYSE:WMT) has started linking its in-store and online shopping data to give more data and insights to advertisers. Advertisers can now use online ad options, display media, native ads and programmatic buying programs to advertise products and services on Walmart website. Yruma thinks that Walmart has a key edge over Amazon due to its grasp over physical stores in the US. The analyst thinks that Walmart could use the treasure trove of in-store data and connect it with online sales to optimize ads and grow ecommerce revenues.
Analysts are also bullish on Wal-Mart Stores Inc (NYSE:WMT) alliance with Chinese ecommerce giant JD.com. The partnership gives Walmart access to the biggest market in the world, where Amazon.com, Inc. (NASDAQ:AMZN) has little or no footprint. Walmart has 433 stores in China. The company acquired a 5% stake in JD, after which JD.com customers could access and buy Walmart products online, and Walmart’s physical stores help JD to store to deliver products. After the success of this venture, Walmart increased its ownership in the company to 12%.
The company is revolutionizing its in-store shopping experience for its customers using technology. Earlier this month, Walmart launched “Scan & Go” app using where customers can shop for products in Walmart stores and walk out without having to wait in the long check-out lines. Using the new app, you can scan barcodes of products and pay online. Just show the digital receipt to a store representative and walk out. These initiatives will increase foot traffic on Walmart stores, and dent Amazon.com, Inc. (NASDAQ:AMZN) customer base.
Earlier this month, Oppenheimer analyst Rupesh Parikh said in a report issued to investors that Walmart’s story is “fresher than it’s been in years”. The analyst cited Walmart’s grocery business and its acquisitions of stakes in ecommerce companies as the reasons of the bullish outlook. Parikh said that Wal-Mart Stores Inc (NYSE:WMT) is readying itself to go toe to toe with Amazon.com, Inc. (NASDAQ:AMZN) and other competitors both offline and online. Oppenheimer has a $90 price target on Walmart.