it's not a secret Amazon is the world's e-commerce champion. The company's online store sales in 2023 were $232 billion. This is simply huge.please consider that eBay The company remains one of the world's largest e-commerce businesses, but with trailing 12-month total merchandise volume of $73 billion, it's nowhere near the size of Amazon.
E-commerce has been around for decades, and Amazon was an early pioneer in this space. But investors need to resist the urge to think of e-commerce as an upcoming trend. According to Statista, the global e-commerce market is expected to grow at an average annual rate of nearly 10% until 2028, which is a huge number for an industry that is already this large.
Amazon and eBay are the top e-commerce platforms and are very likely to continue to grow as the industry continues to grow. However, there is another major player in this space that investors should not overlook.
surely, walmart (WMT 1.97%) is known for having over 10,000 brick-and-mortar locations and is now a $100 billion e-commerce company. Here's what the company's fast-growing e-commerce business means for investors.
Walmart's e-commerce business is thriving
In fiscal year 2024, Walmart's weekly active e-commerce customers increased 17% year-over-year. The company's U.S. e-commerce sales also rose 17% that year. International e-commerce sales increased by a whopping 44% year over year.
Consumers appear to be using Walmart's e-commerce services more frequently as the service improves and provides a more compelling reason to adopt.
When Walmart talks about e-commerce, understand that it's more of an omnichannel strategy, a blend of digital and in-store sales. When a customer orders online and picks it up in-store, it's considered e-commerce.
Management said Walmart has invested in order fulfillment capacity in recent years. Orders are delivered faster, customer satisfaction is improved, and like Amazon, more third-party sellers are using the company's e-commerce platform and fulfillment services.
Walmart Marketplace, the company's business to facilitate sales for third-party sellers, saw a 20% increase in merchants using the service in its fourth fiscal quarter, making it a high-margin revenue stream for the company. has increased.
What it means for investors
I don't want to overstate the importance of Walmart's e-commerce business. Its entire retail empire is huge and growing at this scale is difficult. The company expects consolidated sales growth in fiscal 2025 (starting February 1st) to be only 3% to 4%.
Even considering Walmart's recent e-commerce success, investors in Walmart stock need to know that this is a low-growth business.
But I don't want to underestimate the importance of Walmart's e-commerce business either. For a company of this size and maturity to be able to adapt its business to current consumer trends is commendable and shows that Walmart can maintain its staying power far into the future. .
More than that, Walmart's success in e-commerce offers opportunities for higher profit margins. E-commerce is likely to drive membership growth for subscription services such as his Walmart+, the company's answer to Amazon Prime. Third-party seller sales have high profit margins, as Amazon and eBay clearly demonstrate. And e-commerce allows Walmart to grow its digital advertising business.
That's something investors should pay attention to. If Walmart can grow profits faster than sales, the stock could have even more upside potential.
John Mackey, former CEO of Amazon subsidiary Whole Foods Market, is a member of the Motley Fool's board of directors. John Quast has no position in any stocks mentioned. The Motley Fool has positions in and recommends Amazon and Walmart. The Motley Fool recommends his eBay and recommends the following options: His April 2024 $45 short call on eBay. The Motley Fool has a disclosure policy.
