Walmart on Wednesday announced its latest attempt to transform its e-commerce business: It is debuting a “pickup discount,” meaning that it will offer reduced prices on more than 1 million online-only items to shoppers who opt to retrieve their orders at a store instead of having them delivered to their homes.
Lore offers this explanation for how the pickup discount works: Typically, the last-mile delivery to a customer’s home is the most expensive part of fulfilling an online order. If Walmart can simply use its own trucks to deliver those boxes to its stores, that strips out much of the cost. Because it has trimmed delivery costs, Lore says, it can pass on those savings to shoppers.
For example, a Britax B-SAFE car seat that typically costs $148.05 will cost $140.65 with the pickup discount. A 70-inch 4K television from Vizio that is priced at $1,698 will have a $50 discount.
The pickup discount is Lore’s latest experiment to encourage online buyers to shop in ways that are less profit-eating for retailers. At Jet, for example, he has piloted an approach to pricing that encourages shoppers to bundle their orders, rather than firing off multiple orders for single items. When the seller can ship those items all at once, its fulfillment costs are lower, so it can offer lower prices.
Jet also offers other ways to knock more pennies off your receipt: Shoppers pay less if they waive the ability to do a free return. They see that they can pay a still lower price if they use a debit card.
The Walmart pickup discount appears to be the next iteration of that line of thinking. On April 19, the mega-retailer will begin offering it on about 10,000 items. It will be offered on more than a million items by the end of June.
“This is really about giving the customer more choice in ways that are only possible with this unique set of assets,” Lore said in an interview.
Under Lore’s leadership, Walmart has been trying new tactics to flex more muscle in the online arena. In January, it announced that it would offer free two-day shipping on orders over $35 without a membership fee, an offer meant to challenge Amazon’s lucrative Prime program. Prime customers pay $99 a year to receive free two-day shipping on millions of items, but the membership also includes access to video and music streaming, photo storage, and other services. (Jeffrey P. Bezos, the chief executive of Amazon, owns The Washington Post.)
And Walmart has shown fresh appetite for acquisitions, scooping up quirky women’s apparel website Modcloth and dropping $51 million on online outdoors retailer Moosejaw.
The pickup discount may prove particularly appealing to the value-oriented customers that have long been the bedrock of Walmart’s business. And yet, it might not do much to lure away the millions of shoppers who have flocked to Amazon because of the convenience of having an order show up quickly on their doorsteps.
Walmart’s pickup discount launches as the wider retailer industry is investing in making in-store pickup a more attractive and widely available option. Target, Kohl’s, and JCPenney, for example, have each been expanding their programs to more locations. Target is even experimenting with a prototype for a new store that would have a separate entrance for shoppers picking up grab-and-go orders. Pickup not only allows retailers to save on shipping costs, but by bringing the shopper into the store, it provides a chance to entice them to spend more money. Kohl’s, for example, said last year that for every $100 a customer spends on store pickup, they buy, on average, $25 worth of additional goods when they come to retrieve the order.
