Wal-Mart Stores Inc. is looking to use lower prices to lure online shoppers into its stores.
Starting April 19, Wal-Mart will offer a discount on 10,000 online-only products if a shopper opts to have those items shipped to any Wal-Mart store. The discount offered will depend on the specific item and product category. For example, shoppers will shave $50 off of a 70-inch TV that retails for $1,698 or $7.40 off a $148.50 car seat if they have their online purchase of those goods shipped to a Wal-Mart store.
It costs less for us to ship to stores.
The program, which Wal-Mart calls Pickup Discount, will be available in the contiguous United States.
In a blog post announcing the move, president and CEO of U.S. e-commerce Marc Lore writes that 1 million products will be included in the ship-to-store discount program by the end of June.
“One of the things I love most about Wal-Mart’s heritage is the maniacal focus on our customers and finding ways to offer them low prices – every day,” Lore writes. “We do this by creating efficiencies in our business so we can share the savings with them. And, in the online world, we can use our physical stores and supply chain to do some pretty unique things for our digital customers.”
Wal-Mart, No. 4 in the Internet Retailer 2016 Top 500 Guide, acquired Jet.com in August for $3.3 billion. As part of the deal, Jet.com co-founder Lore became president and CEO of e-commerce at Wal-Mart.
The move to discount Walmart.com orders that are picked up in stores is similar to online marketplace Jet.com’s Smart Cart program, something Lore acknowledges in the blog post. The Jet Smart Cart offers shoppers a discount on online orders if they order more of a particular product or, for example, forego the right to return the product.
With the Pickup Discount program, “We can remove the last mile delivery costs (that represent the lion’s share of the costs to ship products to customers’ homes) when we leverage our fleet of more than 6,700 trucks to deliver products directly from fulfillment centers to our 4,700 stores,” Lore writes. “It costs less for us to ship to stores. So, our customers should share in those savings,” Lore writes, declining to specify how much less an online order shipped to a store costs compared with one shipped directly to a shopper’s home.
With profits down year over year in Wal-Mart’s recently concluded fiscal 2017, the retailer may be looking to wring cost savings on fulfillment while offering customers another choice in how they receive their orders. Wal-Mart reported in February that its online sales grew 15.5% year over year in fiscal 2017 ended Jan. 27. The retailer’s net income slid by 7.2% to $13.643 billion, down from $14.694 billion in fiscal 2016.
In late January, Wal-Mart dropped its $49 annual ShippingPass program, which struggled to compete with Amazon.com Inc.’s Prime, and instead opted for a two-day free shipping model on all Walmart.com orders of $35 or more. Three weeks later, Amazon (No. 1) countered by lowering its free shipping threshold to $35 for non-Prime orders. Prime offers members free two-day shipping and other perks, such as free streaming video and music, in exchange for a $99 annual fee.
Wal-Mart is not the first retail chain to offer shoppers a discount on online orders picked up in stores, but it does appear to be the first to make it a full-time, regular offering. Sears Holdings Corp. (No. 14 in the Top 500), offered shoppers 20% off select products that were bought online and picked up in store during the final week of the 2016 holiday shopping season.
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