Analysis: Walmart’s new pickup discount
Walmart recently announced that, starting April 19, it would order a discount on select items that are ordered online and then picked up in the store. Here is commentary on what the new initiative means for Walmart in terms of last-mile delivery as well as its competitors.
“Last-mile delivery makes up 28% of the costs of delivery alone. Walmart knows this all too well and is turning to buy online, pickup in store (BOPIS) to reduce this costly expense with its new Pickup Discount program. Not only is the company reducing the hit to its profits by minimizing its delivery costs, but Walmart is further setting themselves apart from Amazon by connecting its purchase data across all channels and utilizing its physical stores to its advantage as local distribution centers – something Amazon is not in a position to do.
Furthermore, Walmart is driving the online shopper into the physical store, where they are well positioned to drive incremental sales. The DynamicAction Retail Index shows an increase of 138% in orders using express shipping so far in 2017 compared to 2016 – meaning that more than ever, consumers are willing to pay to get their packages now.
Walmart’s Pickup Discount program allows consumers to get their package when they want it and to save money. This is a win-win for the consumer and a strategic advantage for Walmart as they begin to sync their Jet.com acquisition to calculate these savings for customers and distance themselves from Amazon by better leveraging their unique physical store footprint.”
- Sarah Engel, chief marketing officer, DynamicAction
“Through this move Wal-Mart is answering consumers’ call of convenience when it comes to their fulfillment options as well as building their customers’ loyalty by rewarding them with select discounts if they choose to buy online and ship to a local store. It’s a win-win for Wal-Mart as they continue to provide an array of fulfillment options yet utilize BOPIS to drive in-store traffic and make their physical store the hub for their entire retail operation.
It also offers consumers a new way to receive online-only items previously only available through ship-to-home fulfillment. A recent Kibo study asked 3,000 consumers what they look for in terms of fulfillment and their answers were highly correlated with overall convenience for the consumer. For example, survey respondents answered that saving on shipping costs overtook getting the product at the time the consumer wants as the #1 reason for using BOPIS. However convenience and saving time are still top reasons.
Additionally, nearly half of consumers said they will remain loyal to a retailer if buy online, BOPIS is available and 66% said providing multiple fulfillment options such as BOPIS, would drive them to complete their purchase. At the end of the day it is about convenience for the consumer and Wal-Mart is doing its part to amp up its strategy to adhere to this need.”
- Tushar Patel, chief marketing officer, Kibo