Walmart recently announced it would introduce an in-store pickup discount for select merchandise purchased online, starting April 19. The discounts will initially appear on approximately 10,000 items and then roll out to more than one million products by the end of June.
The retail giant has been busy expanding its e-Commerce footprint as it continues to keep online leader Amazon in its crosshairs. With the discounts, Walmart is testing yet another way to optimize its various sales channels, all while skipping the last mile of delivery while seeking to draw more consumers into the store.
“We are removing one of the most expensive portions of e-Commerce transaction, which is last mile delivery,” Marc Lore told Fortune in an interview. The CEO of Walmart’s U.S. e-Commerce business and Founder of Jet.com added: “It costs us less to ship to stores, so our customers should share in those savings.”
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The RTP team discusses whether this discount-for-pickup strategy will pay off for Walmart, and how the move affects its ongoing “price war” with Amazon.
Debbie Hauss, Editor-in-Chief: It is a smart tactical move by Walmart to keep customers interested in visiting the store. But I think it may be an even more important lesson-learned for a lot of other retailers that are losing business to Amazon and other online marketplaces. Discount pickup won’t be enough to create a magnet for shoppers, though. The strategy must be combined with all the other important tactics retailers should be employing to increase interest in visiting and purchasing in-store. To that end, Experiential Retail should be a focus for all store-based brands. And please don’t forget employee training and motivation.
Adam Blair, Senior Editor: In the “war” with Amazon, Walmart is playing to its strengths by leveraging its enormous footprint of brick-and-mortar stores — an asset Amazon lacks, at least for the present. And with Amazon reaching out to CPG manufacturers, the timing couldn’t be better. Enticing more shoppers (particularly online ones) to visit a store is Retail 101, but sometimes the most basic ideas are the best ones. As with any good idea, the success or failure will depend largely on execution: Will the pickup discounts be presented clearly and transparently? Will the in-store pickup process really be streamlined? And if it’s too streamlined, will Walmart lose out on impulse sales? If Walmart can get positive answers to these questions and step up its online grocery game at the same time, this policy should be a winner.
Klaudia Tirico, Feature Editor: I will start by saying well-played, Walmart, very well-played. This is a smart move in the retailer’s quest to take on Amazon, considering consumers will go out of their way for a better price. (39%, in fact, according to First Insight.) And what can be more “out of the way” than choosing in-store pickup over home delivery for a discount? Walmart’s brick-and-mortar presence does give it a leg up on Amazon, and it’s using it to its full advantage. But in order to be successful, Walmart needs to make sure the process is as convenient as possible for consumers. This includes creating a destination for BOPIS that will avoid long lines, and maybe even car-side delivery. Either way, I believe Walmart will be successful with this new initiative, and a lot of other retailers could use this as inspiration for competing with Amazon.
Glenn Taylor, Senior Editor: If there is one thing consumers love, it’s being incentivized with lower prices. If Walmart is taking this direction, they’re going to have to be deliberate in promoting the BOPIS capabilities at their stores and the logistics behind the pickup process. You can only implement a system like this if you know it’s going to drive traffic to the BOPIS channel, so any directions here must be clear. I’m particularly interested in the effects this has on the last mile of delivery for Walmart. The company has had a tough time figuring out on-demand delivery, opting to scrap its ShippingPass program in February for free two-day shipping on purchases above $35. If it generates enough of a profit and cuts out a bit of expenses driven by the online delivery side, this looks like it could be a viable option. Amazon already spends an obscene amount of money on its fulfillment capabilities, and its last mile services are a major reason why the company is able to outperform every other e-Commerce brand. While the discounts may not be the be-all-end-all of Walmart’s competitive strategy, they are still part of a bigger picture that the brand is outlining more clearly every day.
