The retailer is also adding last-mile delivery capabilities as it builds out ecommerce capabilities.
An associate selects products for Walmart Online Grocery.
Along with its near-ubiquitous presence stores across the country, Walmart is also the second-largest ecommerce marketplace in the US.
On the heels of a Q4 earnings call where CEO Doug McMillon touting that the discount retailer’s business is “increasingly digital,” Walmart is rolling out a series of new initiatives aimed at bolstering its ecommerce capabilities.
Fulfillment: Increasingly, executives said, Walmart sees its stores as both in-person retail locations and fulfillment centers. It’s a powerful network: The company said it has 4,700 Walmart stores across the country, and that they are located just 10 miles of 90% of the U.S. population. With this proximity to customers, the company is offering third-party fulfillment services. It saw 500% growth in GMV over 2021 in this area of the business. Now, Walmart is evolving the approach to offer Market Fulfillment Centers, which serve as automated fulfillment centers housed inside Walmart’s physical stores. Powered by data tools including machine learning, the MFCs will have inventory that is distinct from the store, and is designed to serve digital customers, the company said in a blog post.
Last-mile delivery: The MFCs will serve as hubs of a delivery operation that is increasingly local. Walmart is seeking to expand in-home delivery to 30 million U.S. homes. To get there, it will employ 3,000 new workers and is building out a fleet of electric vehicles. Walmart is also making preparations to incorporate autonomous vehicles and drones into its delivery network.
White-label: These capabilities won't only be available to Walmart stores. In February, Walmart also announced a partnership with Cognetry Labs that will allow independent and midsize grocery stores to access Walmart’s ecommerce and delivery services. Along with last-mile delivery services for independent businesses called Walmart GoLocal, the arrangement will provide businesses with the opportunity to white-label Cognetry Labs’ technology, which provides grocery retailers with automation-powered solutions around price, fulfillment and delivery drop density.
Over the last 20 years, Walmart's stores transformed local retail markets, transforming the role of physical stories. Combine these moves with the company's recently-unveiled $2 billion ad network, and it all points to the company working to do so again with ecommerce again in the next 20 years.
Read more on Walmart’s ecommerce expansion at the Wall Street Journal.
Upping marketing spend, growing loyalty members and multichannel sales are key to the beauty brand's strategy.
Digital commerce is helping e.l.f. Beauty pour fuel on the fire.
The brand continues to be one of the shining examples of the staying power of beauty products despite consumer pullback in other areas of discretionary spend. e.l.f. grew net sales 48% in the fiscal year ended March 31 as it reached $500 million in sales for the first time. For the most recent quarter, sales grew by a whopping 78%. The company is seeing profit gains as well, as adjusted EBITDA grew 56%.
With the top-line revenue flowing, the brand was opportunistic about how it invested in marketing in the most recent quarter. After upping spend to 33% of net sales in the quarter, the company ended up with marketing and digital investment at 22% of net sales for the year. That was well above the higher end of its 17% to 19% outlook. In the coming year, it expects 22% to 24%.
The fact that digital and marketing fall in the same category reflects the brand’s approach to marketing. It's a favorite among Gen Z, and has found a home on the social apps that are popular with the generation.
“Our disruptive digital-first marketing engine has built strength across multiple social platforms,” CEO Tarang Amin told analysts on the company’s earnings call. “We are a pioneer on TikTok and are now a four-time TikTok billionaire with our last hashtag challenge garnering nearly 15 billion views. We were the first major beauty company to launch a branded channel on Twitch and the first beauty brand on BeReal.”
As a sales category, digital penetration is now 17%, growing from 14% last year. The channel grew 75% in the most recent quarter.
Amin laid out three factors driving this trend:
Marketing. The marketing investment that e.l.f. made brought strong returns, and the digital-first nature of those ads are bringing people to the brand’s digital sales channels.
Loyalty. E.l.f.’s Beauty Squad loyalty program has 3.7 million members, which is a 25% year-over-year increase. Loyalty members are the biggest driver of the brand’s digital business, accounting for over 80% of sales on the brand’s DTC site.
Multichannel. e.l.f. is the only one of the top five mass cosmetics brands that has a DTC site, Amin said. It is also seeing strong growth at Amazon and other retailer ecommerce websites. The growing presence is “building upon itself,” Amin said.
With digital growth, the brand is seeking to expand capacity in the supply chain that will provide more efficiency and faster delivery, as well. It is shifting to a more distributed ecommerce fulfillment model. Previously, it had one automated warehouse in Columbus, Ohio, which meant shipping to the West Coast could take time. Now, it is moving to a multinode distribution network. With the first couple nodes up and running, there is already improvement in delivery times.
The brand is also adding distribution capacity to its main warehouse in Ontario, California.
As marketing helps more people discover and buy from the brand, the operational improvements will help create a customer experience that lives up to the hype.
