Wal-Mart Stores, Inc. (NYSE:WMT) is set to expand a click-and-collect grocery shopping service. At no extra cost, customers can make their grocery orders online and then pick up their groceries in a Wal-Mart parking lot. It’s trying to ape the likes of InstaCart and Amazon.com, Inc. (NASDAQ:AMZN). Can Wal-Mart gain a victory?
Wal-Mart Stores, Inc. Expands Service in Eight Markets
The global retail giant is looking to expand its curbside grocery pickup service in eight markets in the U.S. The firm said Wednesday that it’s starting the click-and-collect grocery program in several new markets as well as expanding in places where it’s already optional.
Beginning this month, stores in Kansas City, Missouri; Austin, Texas; Charleston, South Carolina and other cities will have the free pickup service available.
The service is simple: customers shop online during the week and add items to their cart. They also have the option of starting a quick order option through the mobile app. When the cart is full, they can choose a time to pick up their groceries at a designated space. If orders are placed by 10 a.m. then these orders can be picked up on the same day. It’s a great time saver.
Michael Bender, EVP and COO of Walmart Global e-commerce says that it’s rolling out the service because it’s very popular with shoppers. Bender notes that 90 percent of its pickup shoppers are repeat users, and 90 percent of online orders are for fresh grocery items. Only time will tell if Wal-Mart can maintain that level of momentum.
Writing in a blog post, Bender states that customers have been very satisfied with online grocery shopping so far. He added that shoppers appreciate the fact that they can shop for whatever they want whenever they wish. Also, store employees choose the groceries for customers.
“Even better is that our grocery pickup service is 100% free to use. We offer the same everyday low prices found in our stores, and there are no hidden fees,” Bender said.
Although many of its competitors deliver groceries straight to customers’ homes, Wal-Mart is likely pleased with the current system because they save money on labor and fuel costs. Besides, the numbers show that consumers don’t mind coming to a store, picking up their goods and then leave.
Wal-Mart Stores, Inc. Versus the World?
Investors were happy when Wal-Mart said that it would be focusing greater attention on its ecommerce business. However, this meant trying to keep up with the likes of Amazon.
This curbside grocery pickup is just one of the many ways that Wal-Mart has tried to stay competitive with the online retail juggernaut. Just as an example, Wal-Mart is trying to follow in the path of Amazon by developing its own drone delivery service. Moreover, it’s looking to establish its own Prime-like delivery service.
Will a drone be enough to compete with Amazon? Perhaps not.
It’s true that Wal-Mart makes a small amount of change from its online business. However, it has started to lose business to the likes of Amazon. Indeed, Wal-Mart rakes in more revenues, but the retailer posted its first annual decline in revenues in March. It was 45 percent, compared to Amazon’s constant annual revenue growth.
As Wal-Mart attempts to integrate its groceries and ecommerce, Amazon holds an advantage: consumers, especially those with little time, don’t need to visit a store. What’s interesting, however, is that the paucity of stores is what’s holding back Amazon in this space. So, when diving into the matter even further, Wal-Mart has the infrastructure advantage.
“Grocery has been a relatively measured roll-out by Amazon standards — we continue to work on the customer experience and making sure we’re really delivering a quality experience for shoppers, and we’re also working on the economics,” said Phil Hardin, Amazon’s director of investor relations, last year in a conference call.
Whatever the case, the online grocery business is beginning to heat up.
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