Wal-Mart Stores Inc. has added a new incentive that offers discounts on eligible, online-only items, including groceries, for click-and-collect customers.
Pickup Discount, the new service, will initially be available on about 10,000 items – including food, Walmart has confirmed to Progressive Grocer – but will roll out to more than 1 million of the most popular items by the end of June. The new service marks the Bentonville, Ark.-based mega-retailer’s latest maneuver in its fight against Amazon.com, another recent one being the introduction of free two-day shipping to rival Amazon's Prime two-day-shipping subscription service.
“We’re creating price transparency to empower customers to shop smarter and choose what’s best for them,” said Marc Lore, president and CEO of Walmart U.S. eCommerce. “Now, they can either pick up and save even more money or ship two-day for free to home, without paying for a membership.”
To offer this service, Walmart is ditching last-mile delivery costs, which represent most of the costs for shipping products to customers, which it can do by leveraging its 6,700-plus-strong fleet of trucks to deliver products from fulfillment centers to its 4,700 stores. Since it costs less to ship to stores than it does to ship to customers directly, the savings are passed on to customers who pick up in-store. Discounts are determined by each individual item and the cost to ship it directly to customers.
If a recent study from Dallas-based omnichannel solutions provider Kibo has anything to say, it's that the new program should resonate with consumers. Respondents said saving on shipping costs is the No. 1 reason for using a click-and-collect service, overtaking getting a product on time, the study claims. However, convenience and saving time remain top reasons.
Moreover, nearly half of consumers said they will remain loyal to a retailer if click-and-collect service is available, and 66 percent said providing multiple fulfillment options such as click-and-collect would drive them to complete their purchase, the study says.
“With Pickup Discount, we are beginning to take the ethos behind Jet’s Smart Cart and marrying it with Walmart’s operational efficiency to bring price transparency to life at Walmart.com,” continued Lore, who came to Walmart through the retailer’s acquisition of Jet.com last year.
Additionally, Walmart is working to enhance the in-store pickup experience by making it even simpler and more convenient for customers. It also has been aggressively expanding its online grocery pickup service, now available at 600 locations, with another 500 to be added throughout the rest of the year.
In introducing Pickup Discount, Walmart is not only reducing the hit to its profits by minimizing delivery costs, but also further setting itself apart from Amazon by connecting its purchase data across all channels, as well as using physical locations to its advantage as local distribution centers, says Sarah Engel, chief marketing officer at DynamicAction, a Redwood City, Calif.-based provider of analytics solutions. This is something Amazon is not positioned to do.
"As retail is in a significant transformation mode," she says, "there are a few key truths that omnichannel retailers must acknowledge: They must be able to leverage the strength of their physical stores to their benefit and not let them become a financial detriment. They must have connected data across channels and understand their customer patterns to drive larger and more profitable sales in-store and online. And they must realize that the convenience their customer now expects through their delivery strategy inevitably impacts their bottom line."