Walmart Inc. has partnered with e-commerce giant Shopify Inc. to expand its third-party marketplace site and grab more of the pandemic-fueled surge in online shopping. Shares of the Canadian technology company rose in early trading.
The world’s largest retailer aims to add 1,200 Shopify sellers this year, Walmart executive Jeff Clementz said in an interview. The company’s marketplace site, which already offers more than 75 million products, grew at a faster pace than Walmart’s overall web business in the first quarter, and third-party sales are typically more profitable as the sellers pay a fee to list items and often shoulder the delivery costs.
The collaboration is Walmart’s latest attempt to expand the scale and profitability of its $21.5 billion U.S. e-commerce business, which is gaining ground on market leader Amazon.com Inc. but continues to lose money. In recent years, Walmart has rolled out a fulfillment service for third-party sellers, allowed customers to return marketplace items in its physical stores and jettisoned millions of third-party items that didn’t meet quality standards.
“There are many Shopify sellers who were already on Walmart.com, but we have not penetrated their base to the extent possible,” said Clementz, who is vice president of Walmart Marketplace. “There’s a tremendous opportunity.”
For Shopify, the deal — expected to be announced as early as Monday — provides its network of millions of merchants access to Walmart’s customers, and follows a May linkup with Facebook Inc. that allowed retailers to import Shopify product catalogs to the social-media giant’s new Shops service.
“Few companies in the world match the sheer size and scale of Walmart,” said Satish Kanwar, Shopify’s vice president of product. The deal opens the door for small and medium-sized businesses “to access the 120 million customers who visit Walmart.com every month.”
The deal is “a win-win for both companies,” said Juozas Kaziukėnas, founder of Marketplace Pulse, an e-commerce researcher. Still, the partnership diverges from Shopify’s typical strategy of acting as a platform for brands competing with large retailers, he said.
Shopify’s U.S. shares rose as much as five per cent before regular trading Monday in New York, even as the Canadian and U.S. markets were poised to decline. Walmart was little changed.
Founded in 2006, Shopify has become the platform of choice for businesses large and small that are looking to get online cheaply and quickly. Monthly fees start at just US$29, which buys a virtual shop and everything that’s needed to run it, including tools to manage payments, inventory and shipping.
The Ottawa-based company claimed the second-largest share of online retail sales in the U.S. last year, and its meteoric growth has made a billionaire out of German-born founder and Chief Executive Officer Tobi Lutke.
Slow Start
Walmart introduced its marketplace site in August 2009, but progress was glacial at first as the retailer was focused more on its massive brick-and-mortar business and slow to recognize Amazon’s growing clout. That started to change when Doug McMillon became CEO in 2014, and accelerated when he put Marc Lore in charge of the retailer’s U.S. e-commerce division after acquiring his online startup, Jet.com, in 2016.
Lore quickly added millions of new third-party items from small vendors who were happy to have an alternative to Amazon’s dominant site. Later, he took a page out of Amazon’s playbook by offering shipping services for third-party vendors through Walmart’s massive logistics network.
“We need to start playing offense,” Lore said at a February investor conference.
McMillon wants to get even more out of the business, especially after shuttering Jet last month. “We don’t think that we’ve done everything we must do, and should do, to support marketplace sellers in terms of the tools and services that we have available,” he said at the conference, just weeks before virus-related stockpiling sent traffic to Walmart’s website soaring. First-quarter U.S online sales rose 74 per cent, more than twice the growth rate that Walmart had previously forecast for the entire year. Walmart has since withdrawn its financial guidance due to the pandemic.
To bring more direction to the marketplace business, Walmart named Jeff Shotts to run it last summer as part of a broader restructuring that sought to better integrate the online business with its physical stores, which often act as e-commerce distribution hubs.
On and Off
Clementz said the two companies had been in talks on and off for years, but discussions heated up over the past six months. A recent pilot test with several Shopify sellers went well, and he foresees eventually having thousands of sellers on Walmart’s marketplace.
There are risks to opening the doors to more and more sellers. Walmart’s marketplace, along with Amazon’s, has faced criticism over the years for carrying offensive items like Confederate flags. In recent years, Walmart has pulled about 20 million items off the site that didn’t meet its quality standards. Though Amazon’s marketplace is open to virtually anyone who goes through an online registration process, Walmart’s is invite-only so it can vet sellers. It also uses machine learning and keyword recognition technology to spot suspect sellers.
TOKYO (AP) — Japanese technology group SoftBank swung back to profitability in the July-September quarter, boosted by positive results in its Vision Fund investments.
Tokyo-based SoftBank Group Corp. reported Tuesday a fiscal second quarter profit of nearly 1.18 trillion yen ($7.7 billion), compared with a 931 billion yen loss in the year-earlier period.
Quarterly sales edged up about 6% to nearly 1.77 trillion yen ($11.5 billion).
SoftBank credited income from royalties and licensing related to its holdings in Arm, a computer chip-designing company, whose business spans smartphones, data centers, networking equipment, automotive, consumer electronic devices, and AI applications.
The results were also helped by the absence of losses related to SoftBank’s investment in office-space sharing venture WeWork, which hit the previous fiscal year.
WeWork, which filed for Chapter 11 bankruptcy protection in 2023, emerged from Chapter 11 in June.
SoftBank has benefitted in recent months from rising share prices in some investment, such as U.S.-based e-commerce company Coupang, Chinese mobility provider DiDi Global and Bytedance, the Chinese developer of TikTok.
SoftBank’s financial results tend to swing wildly, partly because of its sprawling investment portfolio that includes search engine Yahoo, Chinese retailer Alibaba, and artificial intelligence company Nvidia.
SoftBank makes investments in a variety of companies that it groups together in a series of Vision Funds.
The company’s founder, Masayoshi Son, is a pioneer in technology investment in Japan. SoftBank Group does not give earnings forecasts.
Shopify Inc. executives brushed off concerns that incoming U.S. President Donald Trump will be a major detriment to many of the company’s merchants.
“There’s nothing in what we’ve heard from Trump, nor would there have been anything from (Democratic candidate) Kamala (Harris), which we think impacts the overall state of new business formation and entrepreneurship,” Shopify’s chief financial officer Jeff Hoffmeister told analysts on a call Tuesday.
“We still feel really good about all the merchants out there, all the entrepreneurs that want to start new businesses and that’s obviously not going to change with the administration.”
Hoffmeister’s comments come a week after Trump, a Republican businessman, trounced Harris in an election that will soon return him to the Oval Office.
On the campaign trail, he threatened to impose tariffs of 60 per cent on imports from China and roughly 10 per cent to 20 per cent on goods from all other countries.
If the president-elect makes good on the promise, many worry the cost of operating will soar for companies, including customers of Shopify, which sells e-commerce software to small businesses but also brands as big as Kylie Cosmetics and Victoria’s Secret.
These merchants may feel they have no choice but to pass on the increases to customers, perhaps sparking more inflation.
If Trump’s tariffs do come to fruition, Shopify’s president Harley Finkelstein pointed out China is “not a huge area” for Shopify.
However, “we can’t anticipate what every presidential administration is going to do,” he cautioned.
He likened the uncertainty facing the business community to the COVID-19 pandemic where Shopify had to help companies migrate online.
“Our job is no matter what comes the way of our merchants, we provide them with tools and service and support for them to navigate it really well,” he said.
Finkelstein was questioned about the forthcoming U.S. leadership change on a call meant to delve into Shopify’s latest earnings, which sent shares soaring 27 per cent to $158.63 shortly after Tuesday’s market open.
The Ottawa-based company, which keeps its books in U.S. dollars, reported US$828 million in net income for its third quarter, up from US$718 million in the same quarter last year, as its revenue rose 26 per cent.
Revenue for the period ended Sept. 30 totalled US$2.16 billion, up from US$1.71 billion a year earlier.
Subscription solutions revenue reached US$610 million, up from US$486 million in the same quarter last year.
Merchant solutions revenue amounted to US$1.55 billion, up from US$1.23 billion.
Shopify’s net income excluding the impact of equity investments totalled US$344 million for the quarter, up from US$173 million in the same quarter last year.
Daniel Chan, a TD Cowen analyst, said the results show Shopify has a leadership position in the e-commerce world and “a continued ability to gain market share.”
In its outlook for its fourth quarter of 2024, the company said it expects revenue to grow at a mid-to-high-twenties percentage rate on a year-over-year basis.
“Q4 guidance suggests Shopify will finish the year strong, with better-than-expected revenue growth and operating margin,” Chan pointed out in a note to investors.
This report by The Canadian Press was first published Nov. 12, 2024.
TORONTO – RioCan Real Estate Investment Trust says it has cut almost 10 per cent of its staff as it deals with a slowdown in the condo market and overall pushes for greater efficiency.
The company says the cuts, which amount to around 60 employees based on its last annual filing, will mean about $9 million in restructuring charges and should translate to about $8 million in annualized cash savings.
The job cuts come as RioCan and others scale back condo development plans as the market softens, but chief executive Jonathan Gitlin says the reductions were from a companywide efficiency effort.
RioCan says it doesn’t plan to start any new construction of mixed-use properties this year and well into 2025 as it adjusts to the shifting market demand.
The company reported a net income of $96.9 million in the third quarter, up from a loss of $73.5 million last year, as it saw a $159 million boost from a favourable change in the fair value of investment properties.
RioCan reported what it says is a record-breaking 97.8 per cent occupancy rate in the quarter including retail committed occupancy of 98.6 per cent.
This report by The Canadian Press was first published Nov. 12, 2024.
