Walmart turns up the heat on Amazon with new discounting program

Walmart has fired another shot at Amazon.



In a move that leverages the retail giant’s vast store and delivery networks and expanding online capabilities, Walmart, starting April 19, will begin offering a discount on merchandise that customers buy online and have shipped to a Walmart store for pick-up. Walmart’s new Pickup Discount program will initially be available only on about 10,000 items, but will be expanded to more than one million of the chain’s most popular items by the end of June.



Here’s how it works: Customers shop an item notated with “pickup discount” and ship to their local store for pick up. The shoppers will then receive a discount based on each individual item.



The discounts will vary. Walmart offered a few examples: Lego City Great Vehicles Ferry, which sells for $23.99, will have a pick-up discount of $2.55; a Britax infant car seat that sells for $148.05 will have a discount of $7.40. Larger items will offer bigger discounts: a Vizio television that has a $1,698 price tag will offer a discount of $50.



The new feature was inspired by the Smart Cart technology developed by Jet.com, the e-commerce retailer Walmart acquired in September. The technology, which used an algorithm to drive discounts, offered on a variety of ways shoppers could save on their purchases. (The founder of Jet.com, Marc Lore, is now the president and CEO of Walmart’s U.S. e-commerce.)



The program takes “the ethos behind Jet’s Smart Cart and marries it with Walmart’s operational efficiency to bring price transparency to life at walmart.com,” Lore wrote in a blog on Walmart’s website.



“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 added. “This means, quite simply, it costs less for us to ship to stores. So, our customers should share in those savings.”



The new pickup discount complements the Walmart’s Online Grocery Pickup service, which is now in 600 stores. The chain plans to expand the service to an additional 500 stores this year, according to Lore.



“We already offer great prices online,” Lore said. “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.”



The service comes as the shipping and pricing wars between Walmart and Amazon intensify. In a move to counter Amazon Prime, Walmart recently eliminated its ShippingPass program in favor of a free two-day shipping program.