RetailAnalysis
12 April 2017
Walmart to offer discounts for store pickup

Walmart is to offer its customers a discount for online-only items that they ship to store for pickup.

Using Jet.com's proprietary pricing technology

'Pickup Discount', which will launch on April 19, will initially be available on around 10,000 items. This will be rolled out to more than 1m of the most popular items by the end of June. This development builds on the smart basket technology which has been used by Jet.com, the ecommerce business which Walmart acquired last year. 

The proprietary technology and dynamic pricing model has enabled Jet.com's customers to make choices that lower their prices as they shop. This includes offering additional discounts when multiple orders are combined in a single delivery, opting out of free returns and using debit cards.

Enabling shoppers to participate in lowering system costs

Through using this technology within Walmart.com, the retailer is bringing a new level of pricing transparency to its shoppers. Essentially they are able to participate in lowering system costs and share in the savings that Walmart makes by shipping directly to store. Using its own logistics network, which consists of dedicated ecommerce fulfilment centres and a fleet of 6,700 trucks, delivers major cost advantages and efficiency benefits for the retailer. 

By using store pickup, Walmart is able to eliminate the last mile delivery costs, which represent the majority of the costs associated with delivering to customers' homes. The initiative is expected to save customers 3% to 4% on the cost of goods. This helps retailer to build further trust around low prices. 

Using its stores as a source of competitive advantage

This move also demonstrates how Walmart is using its physical stores as a competitive advantage versus online specialists such as Amazon. Over the last few years, a number of online specialists have been developing a physical presence, in part to facilitate store pickup, but also to build a stronger connection with their customers. This includes Amazon which has opened its own bookstores and is currently testing Amazon Go, a grocery store concept, and Amazon Fresh Pickup centres in Seattle. While 'Pickup Discount' is initially being applied to online only items, the ability to build smart baskets is particularly important for online grocery, where Walmart is aiming to win with the lowest basket of goods.

Walmart has also been focusing on improving the pickup experience at store level. This has included introducing dedicated desks at the store entrance, improving the visibility of pickup lanes and rolling out mobile check- in. This enables shoppers to alert stores teams when they arrive at store through the Walmart app, ensuring a fast and convenient experience.




Stewart Samuel, Program Director, IGD Canada
Based in Canada, Stewart heads up all of IGD's research and coverage on Walmart globally. He is also responsible for shaping IGD's research program across North America. Contact Stewart at stewart.samuel@igd.com for further insight on the region.
@Stewart_IGD
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