Wal-Mart’s knack for cutting costs out of its supply chain has historically resulted in savings for customers of its SuperCenters and other retail formats. The Bentonville, Ark. giant is now applying its approach to online shoppers, with the help of Marc Lore, founder of Jet.com, which was acquired by Wal-Mart. Lore now holds the title of president and chief executive officer of Wal-Mart e-commerce U.S.
“One of the things I love most about Walmart’s heritage is the maniacal focus on customers and finding ways to offer them low prices, every day,” Lore said. “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 is hyper-aware of the 800 pound gorilla that is Amazon, and has been trying to fight the online behemoth head on, with free two-day shipping that bested Amazon’s three- to five-day Prime offer.
Starting on April 19, Wal-Mart will begin offering a discount on eligible, online-only items that customers have shipped to any Wal-Mart store for pickup. The program, called Pickup Discount, will initially be available for about 10,000 items. Once Pickup Discount rolls out, by the end of June, more than one million of the retailer’s most popular items will be eligible.
Lore explained the similarities between Pickup Discount and Jet.com’s Smart Cart. “We’re creating price transparency to empower customers to shop smarter and choose what’s best for them,” he said. “Now, they can either pickup and save even more money, or get free two-day shipping to their homes without paying for a membership.
“With Pickup Discount, we’re beginning to take the ethos behind Jet’s Smart Card and marry it with Wal-Mart’s operational efficiency to bring price transparency to life at Walmart.com.”
Lore pointedly noted that Wal-Mart is leveraging the kind of brick and mortar assets that Amazon doesn’t have and can’t hope to build any time soon. Wal-Mart can remove the last mile delivery costs that represent the lion’s share of the cost of shipping products to customers’ homes, by leveraging the retailer’s fleet of more than 6,700 trucks to deliver products directly from fulfillment centers to Wal-Mart’s 4,700 stores.
“This means, quite simply, that it costs less for us to ship to stores,” Lore said. “So, our customers should share in those savings.
“Ninety percent of Americans live within 10 miles of a Wal-Mart store, and we serve more than a 140 million customers a week, which gives us a unique opportunity to make every day a little easier for busy families,” said Mark Ibbotson, executive vice president of central operations, Wal-Mart U.S. “We also offer Pickup Today, an incredible convenience for ordering items such as toys, office supplies and electronics, including video games. The same-day service has been so popular, we’ve tripled the number of items available for Pickup Today since last year.”
“We’re doing a lot to enhance the pickup experience to make it even simpler and more convenient for customers,” said Lore, adding that Wal-Mart has also been working aggressively to expand its online grocery pickup service, which is now in 600 stores with an additional 500 to be added this year. “We already offer great prices online. We do that every day. Offering a discount on pickup demonstrates how we can take that to the next level by operating more efficiently and removing costs from the system to give customers even more ways to save.”