Wal-Mart to Discount Some Online Orders When Picked Up at the Store

By Sarah Nassauer 

Wal-Mart Stores Inc. wants to make its brick-and-mortar stores a stronger asset as it battles with Amazon.com Inc. online.

The Bentonville, Ark., retailer plans next week to offer discounts on some online orders when customers opt for in-store pickup instead of home delivery, a pricing structure it says passes on the shipping costs it saves. The discounts will be available on items that are only sold online, initially about 10,000 products, like bulky car seats, that are expensive to ship to homes, said Marc Lore, chief executive of Wal-Mart's U.S. e-commerce division.

It is the latest sign that Wal-Mart, the second-largest online retailer in the U.S. by traffic, is working to compete more aggressively with Amazon for shoppers, after years of sluggish online sales growth.

The system resembles a "smart basket" feature on discount online retailer Jet.com Inc., the website founded by Mr. Lore that Wal-Mart bought for $3.3 billion last year. The smart basket lets shoppers choose to forgo returns, pay with a debit card and other options that lower the price of the purchase.

Wal-Mart is far behind Amazon in terms of attracting online shoppers, said Laura Kennedy, director of retail insights at Kantar Retail. Nearly a third of Wal-Mart shoppers also shop weekly at Amazon, while only about 13% of them go to Walmart.com that often, according to Kantar data from last summer.

Wal-Mart, however, often beats Amazon when it comes to online prices for everyday goods like food and toilet paper, Ms. Kennedy said.

Many retailers with physical stores charge shipping fees for delivery, but not for in-store pickup. Wal-Mart's new system is different, Mr. Lore said, because the discount wouldn't apply toward items available at the stores, since retrieving them from shelves or backrooms adds labor costs.

The discount is limited to "online only" items, which Wal-Mart can often deliver to stores with its network of distribution centers and trucking fleets, saving money in the process, he said. Such orders typically arrive at stores in two business days.

For example, a Britax car seat sold on Walmart.com for $148.05 would instead cost $140.65 if picked up at a store, while a Coleman cooler will sell for $111.49 if delivered, but $107.03 if picked up. Wal-Mart plans to make around one million products available for the discount by June.

E-commerce has been a focus for Wal-Mart this year, with the retailer buying up smaller sites such as ModCloth and Moosejaw that tend to attract higher-income shoppers. It also tweaked its free shipping policy, abandoning a membership offer for free, two-day shipping that was similar to Amazon's popular Prime program. Now two-day shipping is free on many Walmart.com items when a customer spends at least $35.

It isn't yet clear how valuable Wal-Mart's online customers will find variable pricing, Kantar's Ms. Kennedy said. In February, the firm conducted a survey asking respondents what pricing gimmicks they would accept, including agreeing to slower shipping or paying with a debit card instead of a credit card. One-third said "I'm not willing to jump through hoops to get a lower price."

Write to Sarah Nassauer at [e-mail]

(END) Dow Jones Newswires

April 12, 2017 00:15 ET (04:15 GMT)

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