There were two pressing questions about Walmart’s online strategy:
- How exactly are Walmart.com and Jet.com going to be different from each other?
- How do recently acquired, vertically integrated online retailers Bonobos and Modcloth fit into Walmart’s sprawling online empire? Will they just be parts of a wide-ranging portfolio of online properties held only together by who owns those companies?
Turns out, both questions share the same answer.
You’ll likely never see a Bonobos or Modcloth product in a Walmart store or on Walmart.com. Bonobos and Modcloth will, however soon be offered on Walmart-owned Jet, according to a conference call with journalists to discuss second quarter earnings.
“The Jet customer demographic —millennial, urban, higher income — aligns well with the demographics of ModCloth and Bonobos,” Walmart spokesperson Randy Hargrove told Business Insider.
This is a clear signal of how Walmart.com and Jet.com will diverge. While Walmart is a mass-market retailer that appeals to every demographic, Jet will be geared toward the urban millennial customer.
Walmart on Thursday said that its second quarter gross profit margin decreased 11 basis points to 25%, with price reductions in key markets and the growing mix of its e-commerce business hitting the gross margin rate. Total revenue in the quarter rose 2.1% or $2.5 billion to $123.4 billion. Excluding currency, Q2 total revenue rose 2.9% or $3.5 billion to $124.4 billion, according to a company press release.
From the press release (PDF):
Net sales and GMV grew 60% and 67%, respectively, as customers continued to respond well to new initiatives and an expanded assortment of more than 67 million SKUs.
In more than one way, these are genuine ‘Bezos numbers’: Walmart only provides relative numbers for its e-commerce business, nothing concrete.
Given that total revenue at Walmart grew only by 2.1%, it’s not that hard to guess what an increase of online net sales by 60% actually do mean for Walmart and the overall market.
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