Wal-Mart Stores Inc.’s plans to expand its online offerings for same-day, in-store pickup to attract more shoppers this holiday season is seen by industry service providers as a logical move that will also shake up the retail market.
The world’s largest retailer is now fully embracing the “marketplace” model of e-commerce, which has been adopted by companies such as Best Buy, Neiman Marcus and Carrefour, among others. Earlier this week, Wal-Mart said since last year it has bolstered the number of marketplace items by more than 30 times. As a result, its online assortment includes more than 20 million items.
Jennifer Sherman, senior vice president of product and strategy at cloud-based commerce provider Kibo, said “retailers and brands need to be on alert with the news of Wal-Mart focusing their holiday strategy on in-store pick up this holiday season.”
“Although it is difficult for most business to compete with Wal-Mart on price, they can certainly compete on convenience, which shoppers greatly value during the busy holiday season,” Sherman explained. “In-store pickup is a highly effective method that retailers can employ to increase foot traffic and put products in the hands of customers quickly and efficiently.”
Sherman cited a recent study the firm conducted that showed 60 percent of shoppers “will go to another retailer if their preferred fulfillment method isn’t available.” Sherman said in-store pickup is in “high demand and is a critical component to stay competitive this holiday season.”
Adrien Nussenbaum, U.S. chief executive officer and cofounder of platform provider Mirakl, said Wal-Mart’s holiday strategy was “not surprising.”
“Smart retailers are doubling down on omnichannel to maximize the number of revenue opportunities with customers,” Nussenbaum said. “Part of this strategy for Wal-Mart is embracing the marketplace model with its acquisition of Jet.com. Marrying that with its stores as a fulfillment mechanism via click-and-collect helps to compete with Amazon, which does not yet have physical stores.”
Nussenbaum said a marketplace model “also helps to ensure fair pricing, as third-party sellers can compete for customers’ business.”
“In this case, if Wal-Mart loses the sale to a third-party seller, the retailer can still collect a commission on the purchase and have the opportunity for further interaction with the customer when they pick up in store,” Nussenbaum added.
Nick McLean, chief executive officer of OrderDynamics said it was “encouraging to see Wal-Mart taking the omnichannel retail approach to heart, with intensity.”
“The lesson here for all retailers is that to effectively compete with Amazon, you really have to emphasize your strength relative to them,” McLean said. Omnichannel retailers have the physical store advantage. A customer gets instant gratification by picking up their item right away, or within an hour or two. It means one more item can be checked off that long holiday shopping list. One less thing to worry about. On Wal-Mart’s part, this is also a smart move as using customer pickup lets them reduce their shipping and packing costs. That lets Wal-Mart compete on price, while reducing the impact on their own bottom line.”