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Despite Walmart’s tepid 2025 outlook serving as a possible harbinger of things to come for consumer spending, the retail giant continues to shorten the supply chain to improve the profitability of its e-commerce business.
Walmart U.S. saw 20-percent e-commerce sales growth in the fourth quarter, with chief financial officer John David Rainey calling out improving unit economics due to more densified delivery routing and contributions from newer business segments.
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E-commerce delivery costs per order were cut 20 percent in the fourth quarter, a year after Walmart cut these costs by the same percentage. With those savings, operating income across the online segment grew faster than sales in the quarter, Rainey said.
“Instead of delivering a package to one house on the street, one of our drivers is now hitting four or five houses on that street,” Rainey said during the company’s Thursday morning earnings call. “We’re able to spread those costs over more volume.”
For the full year, Rainey said Walmart U.S. saw an 80-percent improvement in total e-commerce losses compared to 2023.
The CFO also highlighted that more than 30 percent of customers that have a package delivered from a store will pay a convenience fee for expedited one-hour or three-hour delivery. A whopping 77 percent of orders placed on Christmas Eve were through this express service.
Expedited deliveries within those delivery windows grew 180 percent year over year, according to Walmart U.S. CEO John Furner. He said Walmart delivered 5 billion units via same-day in 2024, representing more than 100-percent growth over the year prior.
Same-day, store-fulfilled delivery catchment areas now reach 93 percent of U.S. households, Rainey said.
Rainey highlighted that Walmart+ memberships and advertising through its Walmart Connect retail media segment both have helped bolster e-commerce margins as well. Global membership income grew 16 percent in the quarter, while global advertising revenue increased 29 percent.
In total, Walmart’s global e-commerce operation grew 16 percent, led by store-fulfilled pickup and delivery. E-commerce now comprises 18 percent of total sales at Walmart, 11 percentage points higher than the fiscal year ended Jan. 31, 2020, just ahead of the Covid-19 pandemic.
Walmart should continue to see progress on the online profitability front, with Rainey indicating that investments in automation throughout the supply chain are expected to further lower the retailer’s cost to serve.