Walmart's AI-native push delivers 26% e-commerce growth as Sparky users double

Delivering on fulfilment speeds and AI experience - a Walmart status report from CEO John Furner

We are probably as excited about the potential of our business today than at any point in time in the last few years. That's the upbeat assessment from Walmart CEO John Furner as the firm turned in a quarterly profit of $5.33 billion, an 18.8% jump year-on-year, on the back of a 7.3% rise in revenue to hit $177.8 billion. Global e-commerce sales were a bright spot, rising 26% in the first quarter. Furner says: In e-commerce, in general, being able to deliver Walmart prices, at an everyday low price value with over 7,000 rollbacks, in as little as 30 minutes in so many markets is really helpful in terms of the way our customers are telling us they want to live their lives. So I'm excited about e-commerce. That was our ninth quarter in the U.S. of growth over 20% and the team continues to innovate and help make the experience go faster for customers. Furner's point about speed of fulfilment of e-commerce orders is well-made. Within Walmart US, delivery grew 45%. More than 36% of all U.S store-fulfilled deliveries in the latest quarter were delivered in less than three hours, he says: We're getting faster and more reliable in how we fulfil orders. For the quarter, we delivered more than 3.5 billion units, same or next day globally. Investments in our supply chain and the application of AI are improving how we position inventory, make fulfilment decisions and serve customers and members in real time. He goes on: Automation across our supply chain in the US continues to scale. Approximately half of our e-commerce fulfillment center volume in Walmart US is automated, and more than 60% of our stores are receiving some level of freight from automated distribution centers. And more than half of our regional distribution centers are in various stages of being retro-fitted. As we deploy these capabilities, we're also up-skilling associates and creating new opportunities as technology changes how work gets done. We're also strengthening our business mix by scaling higher-margin businesses, or what we call commerce solutions. These are areas like advertising, membership and marketplace, which are becoming more meaningful contributors to our overall profitability. These businesses complement our omnichannel model and support more durable long-term value creation. The progress on automation, whether it's in fulfllment centers, the regional distribution centers, is going well, but the firm is only about halfway through, he adds. So we have more to do. We have more investments coming, but the speed at which these are coming online is much faster than it was a couple of years ago. And Walmart has some particular assets here, he argues: Having 11,000 retail locations with inventory for deploy is a really important enabler in the omni-model. Being able to serve customers in real time requires you to be close, local to understand assortments. The investments we've made in data powered by AI so that we can make faster decisions and fulfill in the very best way possible on top of the supply chain investments that we've made over the last few years is all coming together. Walmart is also becoming more AI-native, contends Furner: Using AI, we can now serve customer needs that previous technologies could not meet, from making shopping easier and more personalized to expanding the range of shopping occasions and interactions we have with our customers and members. Sparky, our AI shopping agent, is making this possible. Weekly active users are up over 100% just in the last quarter, and our investments in AI have increased Sparky intelligence and response quality by 40% this year. Sparky is becoming more useful by the day. You can now use Sparky in stores and automatically re-order items you have on repeat. Sparky even speaks Spanish these days. As we've mentioned before, customers using Sparky have an average order value that's about 35% higher than non-Sparky customers. But not all AI initiatives are as employee-friendly it seems. Following an internal review led by Walmart executives Daniel Danker and Suresh Kumar, roughly 1,000 corporate employees are being cut or re-located as Walmart re-organizes how its technology and AI teams are structured. In a memo seen by media, the two execs state there has been duplication of effort and overlap up till now: In some cases, we've had different teams working on similar problems. The revamp is to "simplify how the work is organized, make ownership clearer, and better align roles to the work and skills we need going forward". But the latest cuts come around a year after Walmart laid off 1,500 corporate employees for similar reasons. Interesting to hear from Walmart's management on the ongoing importance of tech investment. Target's quarterly report earlier in the week came and went without a similar level of focus on show, beyond a value mention of "accelerating technology" and passing reference to some in-store tech and supply-chain investment, despite that firm once being the unquestioned omni-channel retail exemplar. Not even a single mention of AI - didn't they get the memo? Of course, one of the two is doing rather better than the other. Guess which one?

Walmart Goes AI Native and Doesn't Look Back | PYMNTS.com

By completing this form, you agree to receive marketing communications from PYMNTS and to the sharing of your information with our sponsor, if applicable, in accordance with our Privacy Policy and Terms and Conditions. Walmart reported another quarter of double-digit eCommerce expansion and used its Thursday (May 21) earnings call to describe how artificial intelligence (AI), fulfillment investments and platform businesses are changing the economics of retail growth. Executives argued consumers remain engaged, value is as relevant as ever and digital convenience is reshaping how spending decisions get made. "We're also becoming AI native," CEO John Furner told analysts, describing efforts to use AI to make shopping more personalized and expand how customers interact with Walmart across channels. Sparky, Walmart's AI shopping assistant, is the clearest proof point. Weekly active users more than doubled during the quarter, and Furner noted that improvements in AI increased Sparky's intelligence and response quality by 40% this year. Customers can use Sparky in stores, automate repeat purchases and now interact in Spanish. Walmart also noted that Sparky users consistently generate larger average basket sizes than customers who don't. Enterprise eCommerce sales increased 26% during the quarter and represented 23% of total net sales globally. Walmart U.S. recorded its ninth consecutive quarter of digital growth above 20%, continuing a trend that management repeatedly linked to speed and convenience. Delivery remained a central driver of that convenience. Within Walmart U.S., delivery volume increased 45%, and more than 36% of store-fulfilled deliveries arrived in under three hours. During analyst questioning, executives repeatedly returned to the idea that faster fulfillment increases shopping frequency and broadens the range of purchases customers make with Walmart. CFO John David Rainey said Walmart can now reach approximately 60% of U.S. households in 30 minutes or less. He linked those capabilities to stronger engagement and higher participation in membership programs, which continue to become a larger part of the business. Membership fee revenue increased more than 17%, led by Walmart+ in the U.S. Management said members spend roughly four times more overall and generate significantly more annual eCommerce visits than non-members. Fuel savings benefits have also become more relevant in the current environment. Marketplace sales in the U.S. increased nearly 50%, which management described as its strongest performance in roughly 10 quarters. Executives tied those gains to broader assortment, stronger seller participation and greater engagement from customers shopping beyond everyday replenishment categories. Walmart also launched marketplace cross-border capabilities into Canada and Mexico during the quarter. As for the consumer, there are clear signs of selectivity. "We see with our customers that the higher-income customer is spending with confidence into many categories, while the lower-income consumer is more budget conscious and perhaps navigating financial distress," Rainey said. Customers, the executives stated, are moving deeper into Walmart's assortment, particularly through digital channels and marketplace inventory rather than limiting purchases to routine grocery replenishment. The quarter was marked by stronger transaction growth alongside increased unit volumes, suggesting customers continued consolidating trips while looking for value across more categories. At the same time, executives acknowledged at least some near-term pressure points, which helped send the shares lower by about 6.5% in early trading on Thursday. Rainey said higher fuel prices are affecting household budgets while also increasing Walmart's own fulfillment and distribution expenses. Walmart absorbed approximately $175 million in higher-than-expected fuel costs during the quarter. The company said sustained cost pressure could contribute to somewhat higher retail inflation later in the year. Financially, Walmart reported revenue of $177.8 billion, up 5.9% in constant currency. Adjusted operating income increased 5.1%. Management reiterated full-year guidance.