Walmart’s efforts to get closer to the consumer are paying off.
In Thursday morning’s earnings call, chief financial officer John David Rainey touted a new milestone for the retail giant: Walmart can reach approximately 60 percent of the U.S. population in 30 minutes or less.
Walmart has made major strides to improve its Express Delivery capabilities in recent years, with CEO John Furner noting in February that the company averages under one hour to deliver goods to a customer’s doorstep when they select the expedited option.
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Overall, sales in these expedited deliveries have grown more than 50 percent year over year.
Rainey said customer satisfaction with Walmart’s delivery offering has “reached record highs” in the first quarter as the company shipped more than 3.5 billion units either same-day or next-day. Units shipped through the company’s Walmart Fulfillment Services (WFS) offering for third-party sellers increased 150 percent.
The fast delivery times come as the retailer leverages more of its 4,600-store footprint in the U.S. to bridge the last mile.
“In the U.S., sales utilizing store-fulfilled delivery have more than doubled over the past two years,” said Rainey, who also noted that this option accelerated 45 percent year over year. “Over 36 percent of these orders were delivered in under three hours in Q1, an improvement of 800 basis points (eight percentage points) over the past two years.”
Store-fulfilled pickup and delivery, alongside Walmart’s online marketplace segment, powered the Bentonville behemoth to yet another quarter of high e-commerce growth, with total online sales growing 26 percent.
This marks the ninth straight quarter that Walmart U.S. has seen quarterly e-commerce sales growth of more than 20 percent.
U.S. e-commerce incremental margins were about 12 percent in the quarter, according to Rainey, with analysts on the call noting the result was consistent with the high-single-digit to low-double-digit range the retailer has produced in recent years.
The figures indicate Walmart continues to scale its online business more efficiently as its fulfillment and delivery networks mature.
The earnings call came nearly a week after the Financial Times published a report highlighting multiple “Walmart Depot” locations confirmed in several states. These locations are converted from empty storefronts and designed for Spark delivery drivers to collect online orders for last-mile delivery.
Walmart has never publicly commented on the depots.
The company also touched on its continued automation through its U.S. supply chain, with more than 60 percent of stores receiving some level of freight from automated distribution centers.
Approximately 50 percent of e-commerce fulfillment center volume in Walmart U.S. is automated, with more than half of its 42 regional distribution centers currently in various stages of being retrofitted.
“We have more to do,” Furner asserted. “We have more investments coming, but the speed at which these are coming online is much faster than it was a couple of years ago.”
Investments in drone delivery are accelerating rapidly. Walmart completed its 1 millionth drone delivery during the first quarter, with more than 40 percent of those trips occurring within the three-month period alone.
“On average, these orders were airdropped to our customers’ homes in just minutes,” said Walmart U.S. president and CEO David Guggina, who noted that drone programs are now live in 66 locations across four states: Texas, Georgia, North Carolina, and Arkansas.
Walmart’s delivery acceleration has benefited customers across all its channels, including Sam’s Club and international.
At Sam’s Club U.S., delivery from stores grew more than 90 percent, sending the warehouse club’s sales mix from e-commerce to an all-time high, Rainey said.
In India, Walmart subsidiary Flipkart now operates more than 800 micro-fulfillment centers used for fast delivery, called Flipkart Minutes. The locations are delivering items in less than 13 minutes on average across more than 30 Indian cities.
And in China, the retailer delivered over 500 million units in the quarter, with about 75 percent of those arriving in under one hour. The e-commerce operation in the country grew 50 percent.
Walmart had a strong first quarter with net income increasing 18.8 percent to $5.3 billion on a revenue jump of 7.3 percent to $177.8 billion. However, the company’s shares took a more than 7 percent hit in Thursday trading after the firm provided a tepid second quarter outlook amid concerns about constrained consumer budgets.
The retail giant forecasts adjusted earnings per share to be between 72 cents and 74 cents, missing expectations of 75 cents according to economists polled by LSEG. Walmart anticipates net sales will climb 4 percent to 5 percent during the quarter.
