Tuesdays are supposed to mark turnarounds in the market, moving in the opposite direction after a big move on Monday. Not this time! After cratering 112 points on Monday, the S&P 500 (SPY) fell another 98 points, with a two-day decline of 6.3%. That’s the largest two-day loss since August 2015. The most recent two-day decline of over 6% was when the market was correcting after its parabolic move from late 2017/early 2018.
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Walmart started inviting third-party sellers to its new fulfillment service on Tuesday, following a trial run over the past few months.
The new service, called Walmart Fulfillment Services, helps store and ship products for third-party merchants selling on its site, and provides other services like returns and customer support.
Walmart also said it plans to eventually open up the service to non-Walmart products and offer its own shipping service for inventory going to its warehouse.
Walmart’s e-commerce business still lags far behind Amazon’s, accounting for just 5% of the US market, according to eMarketer.
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Walmart launched a number of new sites on Tuesday to share more details about its fledgling fulfillment service that stores and ships products for third-party merchants selling on its marketplace, Walmart confirmed in an email to Business Insider.
Walmart now lets third-party merchants sign up for the service, called Walmart Fulfillment Services, through its own dedicated website. It also has a separate program overview site that explains how it works. In a YouTube video posted on Monday, Walmart’s VP of e-commerce Jare’ Buckley-Cox says, "We’re proud to introduce Walmart Fulfillment Services."
Walmart’s spokesperson confirmed in an email to Business Insider that it started inviting sellers to WFS on Tuesday, after testing it for the past few months. Walmart’s e-commerce boss Marc Lore previously said at an industry conference that Walmart was testing WFS but declined to share more details, according to a Bloomberg report from last year.
"Starting today, WFS is available for existing Walmart sellers and prospective sellers to apply to WFS and expand their assortment and grow their businesses with Walmart Fulfillment Services," Walmart’s spokesperson said.
The move is the latest in Walmart’s effort to grow its third-party marketplace business. Although Walmart’s marketplace, launched in 2009, is still considered to be lagging behind Amazon’s, the new fulfillment service could help recruit more third-party merchants to its site. Products that go through WFS will be eligible for two-day delivery, Walmart says, showing its logistics network is behind Amazon’s one-day shipping program.
"Having a company like Walmart pick-and-pack and ship means you only have to focus on selling," Ed Rosenberg, who runs an online seller group called ASGTG, told Business Insider. "Walmart is signaling they intend to compete with Amazon in this space."
Walmart says all existing and prospective sellers on its marketplace are eligible to sign up. Once approved, sellers can send their inventory to Walmart’s fulfillment centers. Walmart takes care of pickups, storage, and shipping, as well as returns and customer support. All inventory needs to ship from within the US and they can’t be perishable or regulated products, Walmart says.
"Leverage the largest retailer’s fulfillment network to grow your business," Walmart wrote on one of the sites.
Walmart seems to have bigger plans for its fulfillment service. In the Q&A section about WFS, it says the fulfillment service could become available to "partners/sellers/brands who do not sell directly on Walmart.com" in the future, though it didn’t give a specific timeline. It also says that while sellers are currently responsible for shipping inventory to Walmart warehouses, it will start offering its own "inbound logistics services to sellers" starting next year.
Amazon grew its marketplace to an estimated 3 million active sellers, in part by the popular use of its own fulfillment service, called Fulfillment by Amazon. The company doesn’t break out revenue from FBA, but discloses the sales it generated from the various seller services it provides. Last year, Amazon reported $53.7 billion in sales related to third-party seller services, up from the previous year’s $42.7 billion.
Other companies like eBay, FedEx, and Shopify have also launched their own fulfillment services, as more merchants move to selling online. But it’s unclear how successful those services have been. eBay, for example, recently shut down its own fulfillment service in less than a year of launching, according to the Silicon Valley Business Journal.
In its most recent quarterly earnings report, Walmart said e-commerce sales grew 35%. It doesn’t disclose exact sales figures for its e-commerce business.
Most market estimates show Walmart is tiny compared to Amazon. Morgan Stanley estimates Amazon’s US sales volume is around $198 billion, or 12 times larger than Walmart’s. It also estimates that Amazon shipped more than 5 billion packages last year, or roughly 16 times more than Walmart did for its e-commerce business.
Amazon accounts for roughly 38% of all US e-commerce sales, according to eMarketer’s latest report, published this week. Walmart is a distant second, with 5.3% of the market.
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on Friday reported an unexpected rise in first-quarter profits, helped by early signs of stabilization in the U.S. farm sector. The farm equipment manufacturer reported net income of $517 million or $1.63 per share for the quarter ended Feb. 2, up from $498 million or $1.54 per share in the same period last year. Deere’s earnings in the past quarters were buffeted by a nearly two-year-long U.S.-China trade war that hit U.S. agricultural exports, leaving farmers struggling to turn a profit.
As the Canadian cannabis market continues to fail to meet sales projections, the licensed producers (LPs) with the best balance sheets are poised to lead a market rebound. With both Aurora Cannabis and Tilray implementing restructurings, the industry could see a void in certain markets providing opportunities for companies with the ability to fund growth initiatives.Based on the Aurora restructuring, the company is exiting several international markets along with shifting a focus to a value brand. Along with cutting cultivation goals from close to 700,000 kg to only 150,000 kg, the company plans to strip out over C$60 million in quarterly operating expenses. The disruption from removing so many expenses should leave some voids in the market allowing opportunistic moves by companies with the ability to continue investing.In a smaller manner, Tilray is cutting 10% of their workforce. The company hasn’t detailed their plans regarding exiting any businesses, but a business the size of Tilray cutting 140 employees will leave an inevitable void. The move will allow a better funded business to capture more market share as the job functions of the exiting employees aren’t fully absorbed within the smaller workforce.We’ve delved into these three Canadian companies poised to lead a market rebound as other companies restructure and focus on survival:Aphria (APHA)Aphria remains the best value in the sector combined with having the catalysts of their new facility ramping up production. The stock is down to only $4.20 now offering only a $1.12 billion market valuation.The company recently reported FQ2 revenues of C$120.6 million along with positive EBITDA. The cannabis business only accounts for C$33.7 million in quarterly revenues, but the business is poised to jump due to the Aphria Diamond facility increasing production capacity to 255,000 kg annually from a previous level of only 115,000 kg.Aphria forecast revenues reaching C$600 million in FY20 leading to a near C$50 million boost per quarter for the 2H of the year. The big forecast includes adjusted EBITDA in the C$40 million range.The Canadian cannabis company recently raised C$80 million secured by the new cultivation facility pushing the cash balance to nearly C$500 million at the end of November. In January, Aphria raised another C$100 million from an institutional investor to provide additional capital for international expansion and working capital.Due to the additional cultivation capacity, Aphria has a major catalyst to boost the company from existing levels. The stock has the better potential for substantial gains on a turnaround due to their leading financial position and low valuation.The word on the Street rings largely bullish on this cannabis player, with TipRanks analytics demonstrating APHA as a Moderate Buy. Out of 6 analysts tracked in the last 3 months, 4 are bullish on Aphria stock, while 2 remain sidelined. With a return potential of over 60%, the stock’s consensus price target stands at $6.83. (See Aphria stock analysis at TipRanks)Cronos Group (CRON)Cronos is the one company with the cash balance that hasn’t aggressively spent the balance as of yet. The cannabis company ended the September quarter with a cash balance of $2.0 billion from the investment by Altria Group all the way back in 2018.Analysts only forecast 2020 revenues reaching $118 million due to the lack of investments in cultivation facilities so far with the focus more on building global operations, CBD products and Cannabis 2.0 products. The company has an asset-light strategy with a focus on buying cannabis derived products from third parties to be branded under Cronos brands. The biggest issue for the stock is the strategy has been light on products.Investors should see Cronos as the most likely acquirer of beaten down assets, especially any strong cannabis brands that don’t have the capital to remain in business or expand. In this manner, the company is likely to lead the market turnaround via consolidation.A few timely deals to remove a couple of competitors from the Canadian cannabis market could do wonders for removing capacity and pricing pressure from the sector. Cronos can easily spend $500 million to $1 billion without damaging their capital position and ability to invest in growing the existing businesses while boosting their revenue streams.Based on the above factors, Wall Street also has high hopes for CRON. As 3 Buy ratings were assigned in the last three months compared to no Holds or Sells, the consensus is a ‘Strong Buy.’ To top it all off, its $10.29 average price target puts the potential twelve-month gain at a whopping 43%. (See Cronos stock analysis at TipRanks)Canopy Growth (CGC)The largest valued cannabis stock remains Canopy Growth. The company has the cash and backing from Constellation Brands to lead in any sector rebound.For the just reported quarter, Canopy generated December revenues of C$123.8 million for 49% growth over last year due to European acquisitions in the CBD space. The company is now double the size of Aurora and, prior to any reorganization, is spending C$150.3 million on operating expenses or at least three times the reduced base of Aurora.New CEO David Klein discussed some general plans to reorganize the business, but investors shouldn’t expect the scale of the others. Clearly, Canopy needs to cut the C$91.7 million quarterly EBITDA loss in order for the market to have confidence in their sector leadership in the future.The company can reduce the EBITDA loss via revenue growth and higher margins, but some additional constraints on operating expenses would go a long way to reduce any fears of out of control losses. Canopy has a C$2.3 billion cash balance remaining from the Constellation Brands investment allowing for continued investment in international markets and Cannabis 2.0 products. The large cash balance allows the new CEO to continue investing while shutting some smaller segments not generating strong margins and burning cash.The biggest issue for the stock is the $8 billion market valuation. The stock trades at 14x FY21 revenue estimates of ~$550 million. The stock will rebound on any cannabis turnaround, but investors shouldn’t expect massive gains due to the large cap status of Canopy.To find good ideas for cannabis stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.Disclosure: No position.