February 24th, 2025: Walmart reports fiscal year 2025 earnings, Saks stopped paying vendors on time, TikTok subscriptions could help creators, and BigCommerce reports 2024 earnings
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It’s February 24, 2025 and this is the Watson Weekly - your essential eCommerce Digest!
Today on our show:
Walmart Reports Fiscal Year 2025 Earnings
Saks Stopped Paying Vendors On Time
TikTok Subscriptions Could Help Creators
BigCommerce Reports 2024 Earnings
- and finally, The Investor Minute which contains 5 items this week from the world of venture capital, acquisitions, and IPOs.
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BUT FIRST in our shopping cart full of news….
Walmart Reports Fiscal Year 2025 Earnings
Almost all Walmart's gains are being driven from higher income consumers. These are traditional Amazon-oriented convenience consumers. I tried to separate out the data by section.
Overall:
* Almost all gains due to high income consumer. Adding convenience, improving cost structure, growing higher margin businesses.
* guidance: consistent w/ prior years. each of last 2 years. op income 4-6%. this year 5-7% op income guidance (ex-leap year and vizio). Q1 slower op income growth than sales, but will balance out for the year.
* FY 2026 consolidated sales growth 3-4%, w/ lapping leap year. op income grow faster at 3.5 - 5.5%.
* gen merch: low single digit comp sales growth (hardlines, toys, home, fashion)
* grocery standout: mid single digit growth.
Operating Income:
* new businesses (ads, membership, WFS) providing 50% of op income growth
* membership income grew 21% to 3.8B
Ecom + Ads:
* global ecom penetration is now 18% of sales = 1100 bps higher than FY20
* global ads grew 27% to 4.4B
* 24% WMT US Connect (ads) growth
* 80% improvement in ecom losses in last year ("densification" continues its tour of the lexicon)
* wmt ecom sales up 20% in 4Q
Supply Chain:
* 1-3 hour orders from stores up 80% y/y
* same day store units up 100% to 5B units (now up to 30% of store orders)
* WFS penetration record highs of 50%, up 600bps y/y
* 20% reduction in net US delivery cost per order
* store fulfilled delivery catchment = 93% of households can be reached same day
Marketplace:
* wmt us mkpl grew 37% with 45% of orders fulfilled by WFS
* home, auto, seasonal all up 30+%+
* auto, toys, patio all growing 20%+.
Intl:
* canada ecom performance up 30% in 4Q
* good trends in MX/CA. WFS increased 20%. sales of items w/ WFS grew over 85%
and the section you have been waiting for..
The Trump Effect = Non-Factor:
* No impact to guidance on tariffs.
* No impact expected due to immigration.
* Consistent, resilient consumer
* Still cautious outlook due to uncertainty
Strong to quite strong earnings? Don't over-index your business on tariffs and immigration impacts, so sayeth Walmart.
[References:]
Our Second Story
Saks Stopped Paying Vendors On Time
Does Saks Have Its Priorities in the Right Place?
Completing a $2.7 billion dollar merger to then turnaround to your suppliers - many of whom have diminishing options - and then say, we won't pay you on schedule. Eh?
That means to me they plan to make money on "acquisition synergies" between Neiman's and Saks. Which, maybe. Acquisition synergies usually don't pan out.
This is of course the same CEO who had McKinsey advise him on splitting off the eCommerce business from the retailer. Who needs Unified Commerce anyway? It just gets in the way of a good financial engineering project and handsome consulting payoff.
Normally, with such behavior, I would see a hostile bidder or an aggressive private equity bid in Saks future. But perhaps the vultures have already nested and are having their run of the place.
The partnership announced last year with Authentic Brands Group to form Authentic Luxury Group and get into lifestyle and hotel categories tells the story - the company is expanding globally and will be licensing its name out to new ventures.
All the while, giving the middle finger to its suppliers. Are suppliers getting some of the Authentic Luxury Group royalties? No.
Does Saks really not have the funds to pay its suppliers on time after it invested billions in Neiman Marcus Group? This management team is suspect, and to me suppliers have been put on notice. While there are not many alternatives the size of Saks, voting with your feet would at least allow you to negotiate those terms. Otherwise …You are laying down with a dog.
Don't be surprised if you get fleas.
[References:]
https://www.linkedin.com/posts/ecommercestrategyconsulting_does-saks-have-its-priorities-in-the-right-activity-7297959373002199040-VmQI?utm_source=share&utm_medium=member_desktop&rcm=ACoAAAABzTYBMEkpgbpDWbI9miv0bkNA3W2mE1I
Our Third Story
TikTok Subscriptions Could Help Creators
How do I know something won't challenge Amazon? When the press says that something will definitely challenge Amazon. It's through this lens that I review TikTok's shop feature that is in testing similar to Amazon's "Subscribe and Save" feature.
Subscription businesses are great for replenishable and giftable categories - not everything but given the difficulty of customer acquisition, it provides a huge leg up for those who can leverage it. Amazon's Subscribe and Save was an early player, but Amazon has not innovated on the concept in any significant way.
Why would TikTok be testing this?
1 - Several categories that are popular on TikTok like beauty, skincare, health and wellness lend themselves to this category.
2 - Customer acquisition for creators is difficult. If you acquire them once, why not try to acquire them in a more valuable format?
3 - Alternatives to subscriptions for creators are more difficult to manage and setup.
Imagine if you are a creator. You are not an eCommerce expert, but you love creating content and you are are trying to increase your eCommerce revenue. You don't want to go through the hassle of managing and running an entire Shopify store. Why not just take the few features you want: buy from a video, and subscriptions, and leave the rest behind?
Sure, you might need a full-blown eCommerce site as soon as you start to access multiple channels, and it's risky to put all your eggs in the basket of a single social media site, particularly one with increasingly tenuous ownership.
But often, ease trumps all.
And popular creators will always follow the eyeballs. As a result, I do expect that TikTok will keep on adding popular eCommerce features until it looks like a new kind of eCommerce format. One driven by inspiration.
You might say, this is in a similar vein to what Shopify is trying to do with its Shop App. It's just light on the inspiration (the interface is just too traditional) and the top benefit - Shop Cash - seems to mostly expire 90 days after you earn it. In contrast, something like Rakuten points last as long as a year after the last time you earn points.
I do believe that TikTok could go further with subscriptions. This gives me the feeling that TikTok will try to build a subscription-based consumer app as well for people who enjoy buying on the format, in exchange for discounts. If that's the case, I would predict such a format would become one of the top few retail subscription programs in the United States quite quickly.
[References:]
https://www.linkedin.com/posts/ecommercestrategyconsulting_tiktok-subscriptions-wont-challenge-amazon-activity-7297608334109474817-vUy_?utm_source=share&utm_medium=member_desktop&rcm=ACoAAAABzTYBMEkpgbpDWbI9miv0bkNA3W2mE1I
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And Our Last Story
BigCommerce 2024 Earnings: Everyone Off the Bus But B2B, Before It’s Too Late
This was supposed to be about earnings, but instead it turned into something else. Here’s the only earnings number you need to know.
Net Revenue Retention is at 99% for the only segment they care about: Enterprise. Enterprise NRR should be north of 110%.
One more number: Growth guidance at mid-single digit growth rates is not going to cut it.
The most freeing moments in life are the moments when you realize you have nothing to lose.
It is well established that BigCommerce’s only hope is in B2B. First, stop messing around. You literally have nothing to lose. Throw everything else off the bus. For the love of all that is holy.
After all, consider this: If you win, where do you end up? Private equity.
If you lose, similarly, where do you end up? Private equity. Just in a more “special situation.”
At this stage, it’s just about valuation discount anyways.
As a result, BigCommerce cannot afford to divide its efforts.
Still, here is where I think it could win.
1 - Payments. A business model which does not rely on a percentage of sales will attract a lot of the lower-margin (but not low volume) folks in the B2B space. Many whom have several different business units over varying sizes and so cannot afford “per storefront” or “% sales” style pricing.
2 - Actual Service. If your platform is not the best platform in the world (like, if for example your platform has 10x less people than your top competitor), your service better damn well be. If BigCommerce is going to hire experts to sell its software - as it said on its earning call - it better differentiate from its biggest competitor by not hiring bots in Customer Service. Old school distributors want hand-holding as they go through digitization.
While we are at it, why not a real actual professional services group if we are going to truly chase the Enterprise to incubate new ideas with your biggest clients?
3 - Marketing in Overdrive. Like Freaking Hyperdrive.
Safe to say, it’s hard to breakthrough in the platform space. Yet BigCommerce does have a name in some corners of the space. (Though not always the best one). This is a chance to reintroduce yourself to the world.
In my mind, all top execs should visit all their top 25 customers personally. Come clean, tell them you f’ed it up, and recommit to the business. Don’t play games with pricing, upsells or anything else.
Just reset the roadmap and the service levels and hunker down.
Did I mention reset the roadmap? The product needs to modernize and greatly simplify. The story is too damn complicated. Are you a baby Commercetools (whose growth has to be slowing)? Or a more flexible Shopify (which by the way that argument is like 3 years old at least)? Or something else? I can’t figure it out.
What to buyers care about? Ease of use. Cost of ownership. And the Ability to trust the partner and ecosystem they are with for the next 10 years. Those are the only elements that matter.
Everyone else? Please exit the bus immediately.
[References:]
https://www.linkedin.com/posts/ecommercestrategyconsulting_bigcommerce-2024-earnings-everyone-off-the-activity-7298684136741818370-shcA?utm_source=share&utm_medium=member_desktop&rcm=ACoAAAABzTYBMEkpgbpDWbI9miv0bkNA3W2mE1I
It’s That Time Friends, for our Investor Minute. We have 5 items on the menu today.
First
Gryphon Investors Acquire Majority Stake In Spindrift Sparkling Water
San Francisco-based private investment firm Gryphon Investors has acquired a majority stake in sparkling water with real squeezed fruit brand for an undisclosed amount. In conjunction with the new investment, founder and CEO Bill Creelman will transition to a new position, chair of the board, while Dave Burwick will be its new CEO. Creelman and the Spindrift management team will retain a significant equity stake. The transaction is expected to close by the end of the first quarter of 2025.
Second
Steven Madden Buys Tony Melillo's ATM Elevated Essentials Brand
Steven Madden has acquired Tony Melillo's ATM brand for an undisclosed amount from Melillo and Public. Melillo started the brand in 2012 with Public Clothing Company, focusing on casual elevated apparel. However, it has been looking for a buyer for two and a half years. Melillo is signed on for five years-plus as its Creative Director, and the brand will open new stores and will market to new audiences. Multidisciplinary design studio De-Yan will refresh the brand and assist with future positioning.
Third
Zebra Technologies acquires Photoneo
Zebra Technologies, a digital solution provider, announced that it will acquire Photoneo, a developer and maker of 3D machine vision solutions, from Photoneo Brightpick Group for an undisclosed sum. Following the acquisition, the Photoneo Brightpick Group will be renamed Brightpick and continue operating as a separate entity focused on developing and deploying AI robots to automate warehouse operations. Photoneo's 3D machine vision solutions, integrating Zebra's advanced sensors, vendor-agnostic software, and AI-based image processing, enable customers to tackle complex use cases.
Fourth
Tractor Supply Closes Acquisition of Allivet, An Online Pet and Animal Pharmacy
Tractor Supply Company, a rural lifestyle retailer in the United States, announced that it had completed its acquisition of longtime partner Allivet, a privately held online pet pharmacy. The acquisition price was not disclosed but was paid in all cash, and it will benefit Tractor Supply’s 37 million Neighbor’s Club members with a convenient pharmacy solution for pets and animals. This also provides another growth opportunity for Tractor Supply Company.
AND FINALLY …
qeen.ai, AI Agents For eCommerce Startup Raises $10M In Seed Funding
qeen.AI, an agentic platform for e-commerce, has raised $10 million in Seed funding, one of the largest funding rounds in the Middle East and North Africa (MENA) region. The new funding will be invested in go-to-market, hiring talent, and marketing. Is there a market for AI companies to build solutions for merchants versus using tools offered by platforms?
Link: https://techcrunch.com/2025/02/04/google-and-deepmind-alums-raises-10m-for-qee/
Today’s final word for the week of <week>:
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Did you know that RMW Commerce has another podcast? Check out The Watson Weekend for an unfiltered and lively eCommerce chat each week with me, Rick Watson, my co-host Jess Lesesky, and an array of interesting guests and topics. All focused on eCommerce. You can find the Watson Weekend by searching for it on iTunes, Spotify, or Youtube.
That’s all for this week! Till next time Watsonians.....
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Hi, I’m Rick Watson, CEO and Founder of RMW Commerce Consulting and host of the Watson Weekly podcast - your essential eCommerce Digest.
Our production partner for the series is CitizenRacecar. The show is produced by Jose Baez; Production Manager, Gabriela Montequin.
To hear new episodes of the show every Monday morning, subscribe now at rmwcommerce.com/watsonweekly and wherever you get your podcasts.
