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Walmart to Bring Cornershop Under its Delivery Services Wing

Zacks

Walmart Inc.’s WMT delivery services have been one of the prime elements of its brute omni-channel force, and it has been resorting to deliberate actions lately to bolster this arena. Well, recently the company inked a deal to acquire Cornershop, Inc., a renowned online platform for on-demand delivery from specialty food retailers, supermarkets and pharmacies across Mexico and Chile.

Through this $225-million deal, Walmart expects to boost omni-channel presence in Latin America. Cornershop’s digital and technological expertise, along with other capabilities, is expected to support the company’s business in Mexico and Chile. The merger will augment Walmart’s brands, as well as stores and supply-chain network in the region, by utilizing Cornershop’s unique crowdsourced delivery platform.

Banking on each other’s strengths, both these companies are expected to accelerate growth along with providing consumers with improved shopping experiences. Presently, this transaction is subject to certain regulatory approvals and is expected to close by the end of 2018.

Efforts to Boost Delivery Services Bode Well

Walmart is quite acclaimed for its frequent and bold steps in the omni-channel space. In this respect, the company remains committed to enriching consumers’ experiences by providing easy shopping methods and seamless product deliveries.

Incidentally, Walmart recently raised its stake in Dada-JD Daojia to 10% to strengthen its last-mile delivery service. Prior to this, it entered into an alliance with Rakuten in Japan to boost e-commerce and delivery services. Earlier, the company inked a deal with Postmates to extend its online grocery delivery service to cover more than 40% of the families in the United States. Apart from this, Walmart’s Pickup program — its agreements with DoorDash and Deliv; and partnership with ride-hailing services Uber and Lyft, as well as acquisition of last-mile delivery service, Parcel Inc. — highlights its focus on augmenting the capability of delivery services.



We believe that these actions are likely to aid Walmart to offer multiple choices to online shoppers for speedy deliveries amid increasing competition from companies like Amazon AMZN, Target TGT and Kroger KR, which have been striving to strengthen their delivery services as well.

We believe that Cornershop, which is rapidly building scale in Mexico and Chile, is undoubtedly a valuable addition to Walmart’s digital portfolio. Moreover, robust delivery services are anticipated to further uplift the company’s e-commerce business. In fact, such endeavors helped its U.S. e-commerce sales soar by 40% in the second quarter of fiscal 2019, better than 33% rise reported in the fiscal first quarter. Further, management expects to achieve 40% U.S. e-commerce sales growth in fiscal 2019.

Wrapping up

From prudent acquisitions and partnerships to combining shopping with advanced technology, this supermarket giant has played several cards to maintain its presence in the industry. Moreover, we expect this Zacks Rank #3 (Hold) company to continue coming up with strategies to keep it a notch above the peers in the retail industry. Its shares have gained 14.3% in the past three months compared with the industry’s 15.5% rally.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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