Can Walmart-Pay Help Drive Revenues?

WalMart‘s (NYSE:WMT) latest initiative is aimed at making store payments as convenient as online payments. The company launched its mobile payments solution “Walmart Pay” on December 10^th to enable customers to make payments via their smartphones in Walmart stores. ^[1]. It plans to introduce this feature in select stores beginning December and a nationwide launch is expected to be completed by the first half of next year. The company stated that twenty two million customers actively use the Walmart app each month and Walmart-Pay is aimed towards seamlessly connecting online, mobile and stores for 140 million weekly shoppers at Walmart.  We believe that while Walmart-Pay appears to be part to the company’s long term strategy to strengthen its omni-channel distribution, an immediate impact in terms of increase in revenues is less likely.

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Integrating Mobile Devices, Online And In-Store Sales Part Of Long Term Growth Strategy

Walmart’s e-commerce growth is slowing and it appears to be losing to Amazon in this race. In Q3 2015 the company registered a 10% growth in global e-commerce which was much lower than the 30% figure in Q4 2013. ^[2]. During the holiday sales consumers seemed to have preferred Amazon over Walmart.  According to Slice Intelligence, Amazon accounted for more than 36% of the total online sales on Cyber Monday (November 30, 2015) while Walmart’s share was less than 4%. ^[3]. While Walmart showed a 4% increase in comparable store sales in the U.S. for Q3 2015, driven by an increase in store traffic, the company’s long term strategy appears to integrate the store and online experience to gain from the growth in e-commerce. Global e-commerce sales are expected to reach $1,506 billion by 2018 from $840 billion in 2014, although the rate of growth is likely to slow down. ^[4]. Walmart-Pay can help drive e-commerce revenues if app downloads and use increases, as users take advantage of the mobile payment feature to make quicker payments at stores. Mobile device’s share in e-commerce globally was around 34% in Q12015 and this number is expected to reach 40% by the end of 2015. ^[5].Walmart stated that it has 22 million active Walmart-app users, which is a very small numbers compared to the 140 million weekly shoppers at Walmart, and the app users should increase once the mobile payment feature is launched.

Improving Store Convenience

Walmart-Pay is aimed at making the store experience easier and ensuring faster checkouts. This should ideally shorten the check-out queues, attracting more traffic and improving store productivity. However, success of this feature will depend on user acceptance and how convenient customers find the QR scanning option of Walmart-Pay as opposed to waving their iPhones over a credit card terminal at stores which use Apple Pay. Although Walmart decided not to go with Apple Pay and introduced its own mobile payment app via QR scan technology with the aim of ensuring that all smartphone users irrespective of the operating system used can take advantage of this system, whether users will find QR scan convenient and acceptable is yet to be seen.

We don’t expect any immediate increase in Walmart’s revenues after the introduction of Walmart-Pay.  However, its omni channel strategy appears to be taking shape and the company is taking measures to counter Amazon. Impact of these measures will be visible in the coming quarters.

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1. Pay with any iOS or Android smartphone, any major payment type and any checkout lane-all through the Walmart app., Walmart Press Release, December 10, 2015 [↩]
2. Walmart SEC Filings [↩]
3. Amazon dominated Cyber Monday with 36% of All Online Sales, Fortune.com December 2, 2015 [↩]
4. Global Retail Ecommerce Keeps On Clicking, Atkearney.com, April 2015 [↩]
5. State Of Mobile Commerce, Criteo.com, Q12015 [↩]