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Walmart and Home Depot Are Seeing Huge E-Commerce Growth, For Now

Both retail giants shared impressive online sales and customer growth figures. But Walmart did caution that it's getting a boost from stimulus payments.
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Walmart  (WMT)  and Home Depot’s  (HD)  April quarter e-commerce sales were as strong as one would expect in an environment such as the current one.

On Tuesday morning, Walmart disclosed in its fiscal first quarter earnings report that its Walmart-segment U.S. e-commerce sales rose 74% annually last quarter, a sharp acceleration from the 35% growth recorded during its January quarter. The retail giant added that its Sam’s Club e-commerce sales rose 40%, up from the January quarter’s 33%.

Not surprisingly, Walmart saw especially strong growth for its grocery pickup and delivery services -- a strong point for its e-commerce efforts long before COVID-19 -- with the company stating on the earnings call that pickup/delivery growth approached 300% at its peak and that the number of new customers trying the services has risen 4x since mid-March.

McMillon and U.S. e-commerce chief Marc Lore later added that Walmart has also seen higher repeat ordering rates for pickup/delivery services, and (echoing what PayPal  (PYPL)  recently shared about its user growth) that it has seen particularly strong growth among customers who are 50 years of age or older.

Separately, Home Depot disclosed that its e-commerce sales were up 79% annually last quarter, with growth accelerating into the “meaningful triple digits” towards quarter’s end. The company added that its number of e-commerce customers more than doubled, and that online sales accounted for close to 15% of total sales.

Walmart and Home Depot’s e-commerce stats are the latest in a long line of impressive online sales figures to be shared in recent weeks by both retailers and other industry players. Other disclosures of note include:

  1. PayPal reporting that branded transactions for its platform rose 43% annually in April, and that net active account adds rose 135% to 7.4 million.
  2. Target  (TGT)  reporting on April 23 that its online sales were up 275% annually in April up to that point in time.
  3. Best Buy  (BBY)  stating that it has been able to keep sales at 70% of pre-COVID levels thanks to its pickup and delivery services, in spite of numerous store closures.
  4. Wayfair  (W)  reporting that its sales rose 90% annually in April, a major acceleration from the 20% growth recorded in Q1.
  5. Shopify  (SHOP)  disclosing that new store creations on its platform rose 62% from
  6. Etsy  (ETSY)  reporting that its core marketplace sales rose 79% annually in April, and that it also recorded $133 million worth of mask sales that aren’t included in this number.  (AMZN)  has seen growth accelerate as well, but -- thanks both to its size and its prioritizing of orders for groceries and other “essentials” -- its e-commerce growth rates haven’t been quite as spectacular.

Amazon’s revenue rose 26% annually in Q1 to $75.5 billion, with its North American segment growing 29% to $46.1 billion. And its Q2 revenue guidance of $75 billion to $81 billion (possibly conservative, given Amazon’s recent guidance history) implies 18% to 28% growth.

The fact that Amazon is able to fulfill only so much demand in the near-term appears to have given a sales boost to everyone from Walmart to Best Buy to PayPal. However, with Jeff Bezos’ firm having hired 175,000 people to help deal with its demand surge and (anecdotally) Amazon’s delivery times for non-essentials having begun improving, some of the demand from Amazon customers that has gone to Amazon’s rivals since March will likely return to the e-commerce giant.

Stimulus payments have also boosted the e-commerce sales of many firms. On Walmart’s call, CEO Doug McMillon noted that stimulus spending provided a major boost to Walmart’s discretionary goods sales late in the April quarter. CFO Brett Biggs added that such spending has also been lifting Walmart’s May sales, but cautioned that his company expects its impact to diminish later in the July quarter.

The fact that many shuttered retail stores are in the process of reopening will likely also have some impact on e-commerce activity going forward. So might the fact that a portion of discretionary consumer spending will return to areas such as dining and travel, even if such spending remains well below pre-COVID levels for the time being.

Thanks to these factors, the white-hot e-commerce growth rates that Walmart, Home Depot and many others have been sharing should probably ease over the next few months, even if they don’t go all the way back to January and February levels.

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