While many investors think of blockchain technology only in terms of cryptocurrencies, a growing number of S&P 500 companies are utilizing blockchain to streamline their businesses, deepen their competitive advantage, and unlock new market opportunities. And one of the best examples is Walmart (WMT 1.60%), which is reimagining the future of retail.
Walmart is actually an early adopter when it comes to using blockchain technology for business. Over the past two years, those efforts have ramped up considerably. Here's a closer look at two Walmart strategic initiatives with the greatest potential to drive future growth at the behemoth retailer.
Walmart and the metaverse
In December 2021, Walmart jumped on the buzz and excitement around the metaverse by announcing a number of trademark applications for virtual products and digital assets for the metaverse. Then, in 2022, Walmart started building its presence in metaverse worlds. For example, in September 2022, the company announced Walmart Land, a new digital world in the Roblox (RBLX +0.96%) metaverse. It also launched Walmart Universe of Play.
Image source: Getty Images.
Walmart's embrace of the metaverse is part of a growing recognition that retail's future will involve digital goods within digital worlds, not just physical goods in the real world. If you're a long-term investor, this is a very exciting development because it signals that Walmart could be on the cusp of developing an entirely new revenue stream based on digital goods. Instead of buying clothing or household items only for yourself, you will soon be buying these same items for your online avatar as well.
Moreover, Walmart has been filing a number of patents for non-fungible tokens (NFTs), potentially leading to the creation of online marketplaces for buying and selling what Walmart calls downloadable digital goods. In terms of competitive advantage, it's interesting to compare and contrast what Walmart and Amazon (AMZN +3.47%) are doing with NFTs and digital goods.
Like Walmart, Amazon is working on a new NFT initiative that could launch within the next few months. It's uncertain just exactly how Amazon plans to leverage NFTs, but it's clear these two retail giants are convinced that digital goods could represent a new growth opportunity.
Walmart and new crypto payment options
Where Walmart could really make a splash, of course, is if the retailer makes crypto payments a reality for online and in-store shoppers. We've already seen a number of hints that this could be coming soon. For example, Walmart attracted a lot of attention for adding Bitcoin ATMs to its retail stores. There were more than 200 Bitcoin ATMs in Walmart stores in 2021, with plans to expand that number to 8,000.
According to Walmart executives, crypto will soon become a major payments disruptor, especially in the metaverse. Unsurprisingly, Walmart has filed a number of patents related to crypto payments. Whichever retail giant masters crypto payments first will have a huge strategic advantage, especially when courting young, tech-savvy shoppers in the 18 to 34 demographic.
Imagine standing in line at Walmart and using your phone to pay for your purchase with Bitcoin or whichever coin Walmart decides to make the industry standard. Rumors about Walmart eventually accepting Bitcoin or Litecoin as a form of payment have been circulating for years.
Walmart's long-term growth prospects
While some of these Walmart initiatives related to blockchain, crypto, and the metaverse might end up fizzling out, the company has already learned a lot about customers' preferences for buying online these days. Nobody really knows how the metaverse will develop from here, but Walmart -- by virtue of being a first mover -- will be well-positioned to lead when it comes to the metaverse and crypto.
NASDAQ: WMT
Key Data Points
The company appears to be betting big on blockchain and crypto as the future of retail. There will be new demographics to court, new product segments to explore, and new digital goods to create. If Walmart can become a market leader, it could be spectacular for its growth prospects. For that reason, I'm bullish on Walmart as a screaming buy.
