It is no shock that amid the ongoing pandemic, retailers are seeing e-commerce experience rise. But even so, the numbers are staggering.
Walmart reported blowout Q2 revenue on Tuesday, led by a 97% increase in online sales. That comes after Walmart’s online sales went up 74% in Q1. The chain, which was criticized years ago for being too slow to secure its online presence, has been on the e-commerce hotline since a previous pandemic and is now a formidable online outlet for Amazon, which saw their net sales rise 40% in Q2.
The stay-at-home era has served as a tide to lift many e-commerce boats: in the first quarter, Target saw its online sales peak 141%, and said that in April alone, online sales increased by 282%. Target reports second-quarter revenue on Wednesday and is likely to post similar massive e-commerce gains.
Even Etsy (ETSY), which due to its size is rarely compared to giants like Amazon (AMZN), Walmart (WMT), and Target (TGT), saw that their Q2 sales (which are completely online) 137% arises, driven by mask purchases, which accounted for 14% of all sales in the quarter.
Overall, US e-commerce grew by 44.5% in Q2, the largest quarterly growth in more than 20 years.
That e-commerce drive stands in stark contrast to the bricks and mortar headlines: in bankruptcy filings in abundance, including Lord & Taylor, Men’s Wearhouse parent Tailored Brands, Ann Taylor and Lane Bryant parent Ascena Retail, Lucky Brand Jeans , and The Paper Store, all in the past two months.
People wearing face masks are usually waiting to shop at Walmart on July 22, 2020 in Burbank, California. (Photo by Robyn Beck / AFP)
None of this is very surprising at first glance.
As Americans continue to work from home and socialize remotely, they shop online, and they also begin to make more than just essential purchases online. U.S. retail sales rose 1.2% in July, which was less than forecast, but marked the third straight month that spending rose, a good sign of economic recovery. Consumers shop again, but do most things online.
That can be largely attributed to this massive e-commerce excitement leading up to the pandemic.
The tougher question for traditional brick and mortar retailers is: What if it is not?
According to statistics from the Department of Commerce, e-commerce accounts for just 16.1% of total U.S. retail spending. But the direction of the trend is obvious. One year ago, e-commerce accounted for 10.8% of U.S. retail. Just a few years ago, retail chains were encouraged to have an online presence in addition to their physical presence; then over time, the buzzword became an “omni-channel” approach; soon, if that is not the case, a chain’s e-commerce platform will become more important than its physical footprint.
A strong e-commerce platform is on the table for all retailers now, period. Peter Tchir, head of macro strategy at Academy Securities, noted on Yahoo Finance Live on Tuesday: “Walmart would be crazy not to look at Amazon’s valuation and attribute billions and billions to some better online experience.”
That’s bad news for stores like TJ Maxx (TJX) and Ross Stores (ROST), both of which are dinged for their weak e-commerce platforms, and both also reported Q2 revenue this week.
A general view of Lord & Taylor in Mizner Park, one of the nation’s oldest department stores, has begun liquidating 19 of its 38 stores. The retailer filed for Chapter 11 bankruptcy protection Sunday, joining the growing list of retailers who say they were affected by temporary shopping sprees amid the coronavirus pandemic, such as Florida’s Covid-19 surgeon on August 6, 2020 in Boca Raton, Florida. Credit: mpi04 / MediaPunch / IPX
The Walmart report also sheds light on what items Americans buy online: everything, including food. Walmart says its online pickup order sales “will continue to experience very high sales volumes in Q2”. Walmart’s profit, which some analysts expected to suffer from buyers buying lower-cost items, also beat expectations. Walmart saw fewer total transactions (14% down), but larger total at checkout (average ticket price went up 27%), thanks to shoppers buying more expensive items (often with their incentive checks) such as electronics, outdoor furniture, and sporting goods.
