BENTONVILLE, Arkansas – Walmart’s cavernous shops are known for their low-cost grocery aisles, paper towels, and clothing.
Now, these big boxes are shafts for your e-commerce business, serving as a launch pad for delivery drones, automated warehouses for online grocery orders, and checkout locations for direct deliveries to the refrigerator. Finally, they will help you pack and ship goods to individuals and independent companies that sell on the Walmart website through their third-party marketplace.
“The store is becoming a shopping mall,” said Tom Ward, director of e-commerce at Walmart USA, in his first interview since taking office. “And if the store acts as the delivery center, we can ship those items over the shortest distance in the fastest time.”
Walmart relies on two key benefits to boosting its e-commerce business: its approximately 4,700 stores in the United States and its dominance in the grocery business. Ninety percent of Americans live within 10 miles of a Walmart store. The company is the largest grocery store in the United States for revenue. Walmart wants to expand its range of merchandise, improve the customer experience and increase the density of delivery routes to turn e-commerce into a bigger business.
The Covid-19 pandemic created an opening for Walmart to expand its online business. Retailer e-commerce sales rose, helped in large part by the on-shore pickup service it launched years before other retailers struggled to settle during the pandemic. One of the $ 4 Americans spent on click-and-collect orders last year went to Walmart, more than any other retailer, according to an Insider Intelligence estimate.
The global health crisis has also fueled Walmart’s sense of urgency to better compete with Amazon, the clear leader in e-commerce. Amazon has 39.5% of its online market share in the U.S. compared to Walmart’s 7%, according to research firm eMarketer. Last year, based on the 12-month period from June 2020 to June 2021, consumers spent more money on Amazon than the first-time retailer, according to company data and estimates from financial research firm FactSet.
But the e-commerce environment has become tougher in recent months. Earnings have slowed dramatically as more customers return to stores. Even Amazon saw stagnant numbers in the most recent quarter, reporting its slowest sales growth rate in about two decades.
In addition, as Walmart’s fuel and transportation costs rise and inflation has been around for four decades, customers are buying less general merchandise, such as new clothing, because more money is spent on groceries and gasoline. Food sales have lower margins, making it harder to profit from online sales.
Walmart shares plunged last month as it lost quarterly earnings expectations and lowered its earnings outlook. It marked the worst day for retailers on Wall Street since October 1987.
Even with that scenario, Ward said Walmart benefits from having a reputation for value. “Price is key to our customers,” he said. “They trust us to offer them the lowest prices. And there is 60 years of experience managing this in this business.”
Supported in stores
Tom Ward, director of e-commerce at Walmart USA, said he wants to make it easier for customers to shop as they please. To do this, Walmart uses its thousands of stores to increase delivery speed and reduce business costs.
Erin Black | CNBC
Ward said his business vision is simple: to grow online sales while making it easier for customers to shop as they please.
The company’s large number of stores allows Walmart to outperform its competitors, he said. For example, the retailer can identify the store closest to a customer looking for an online printer. Instead of sending the printer from a delivery center hundreds of miles away, a team of in-store personal shoppers can package it, pass it on to a Walmart network delivery driver, and send a notification. to the customer to tell them that the product is on its way. .
“It could arrive in a handful of hours after you buy it online, as opposed to a couple of days later,” he said. “So it’s a transformative experience in terms of speed, which is really hard to replicate without that fantastic footprint we have.”
Walmart has 31 delivery centers in the U.S., but more than 3,500 stores, or about 75% of their total locations, fulfill online orders that would otherwise be shipped through a delivery center. In addition, the company said it can reach 80% of the U.S. population with same-day delivery.
Walmart hopes that the use of its stores will also attract third-party sellers.
Independent vendors who sign up for Walmart’s third-party marketplace can pay for Walmart Fulfillment Services, a company that provides supply chain services from warehousing to shipping from retail stores. This division is led by an Amazon veteran, Jare Buckley-Cox.
Walmart will soon begin packing and shipping merchandise from third-party vendors from stores, which will make deliveries faster and more cost-effective, according to Buckley-Cox. He did not specify a timetable for this service, but said it would arrive in the “near future.”
Sellers who are gaining popularity on the company’s website also have a chance to reach out to store shelves, he said.
Online evolution
The rapid acceleration of online shopping on the Walmart website and through its application increased some of its challenges.
The retailer had two applications: one dedicated to buying groceries online and another for general merchandise, from socks to camping chairs. Last summer, it merged the two into a single app.
The company also had separate teams of shoppers for its stores and for its website, which led to conflicts in assortment and pricing. The two teams merged into one shortly before the pandemic.
In addition, some customers were confused or frustrated by the strange ways in which Walmart fulfilled purchases in the same online order. This spring, a member of Walmart’s e-commerce team experienced it first-hand when he ordered dinner ingredients for Taco Tuesday. Tacos arrangements arrived via home delivery that day, but the taco seasoning arrived in the mail days later.
For the past two weeks, Walmart has launched a change aimed at eliminating this problem, Ward said. When customers start the app to buy, they choose whether they want items by shipping, picking up or delivering. Depending on the choice, the assortment is tailored to which items, such as taco seasoning, are actually on hand.
A package is driven by a conveyor belt inside a Wal-Mart Stores Inc. delivery center. in Bethlehem, Pennsylvania.
Michael Nagle | Bloomberg | Getty Images
“We don’t want to show any friction. We don’t want to show any plumbing,” Ward said. “We want to solve all the magic behind the scenes and make it perfect so they can buy a steak and a bag of apples and a T-shirt and a microwave and do it wherever they want.”
Another emerging piece of Walmart’s plans is its drone delivery service, which Walmart will expand to 37 stores in six states by the end of the year. This development will allow it to reach 4 million homes, according to the company.
On the ground, Walmart wants all the distributors in its network to have densely packed routes with numerous stops in each neighborhood. This commitment led to the launch of GoLocal last year, which allows stores and listed companies, including Home Depot, to use Walmart’s independent drivers to stop online shopping.
“A driver can come to one of our stores and receive a handful of packages for Walmart customers, then pick up a handful of packages for customers from a different company or company and then follow a highly optimized route. which takes advantage of this density and reduces the cost, “Ward said.
Its Walmart + membership program is another way for retailers to try to get more sales online. The $ 98-a-year service includes free online shopping and free home delivery of groceries for orders of $ 35 or more. On Thursday, Walmart kicks off Walmart + Weekend, a new sales event that resembles Amazon Prime Day with offers only available to members.
Walmart in your home
A key part of the retailer’s e-commerce strategy is a high level of customer confidence.
With Walmart’s InHome service, employees enter strangers’ homes and place food directly in the refrigerator or kitchen counter, often leaving a sticky note behind to thank customers for their business and remind them that they’ve been through it. here.
Along with groceries, guests can order clothes, toys and other items delivered at home. They can also leave out returns for Walmart employees to take to the stores.
“People are starting to really think of their InHome partner as an extension of the team that helps them get through their work week or their week at home,” said Whitney Pegden, vice president and CEO of InHome. . “And that’s how, oh my God, you’re here, can you walk the dog? Can you take out the trash?”
The service is expanding to major cities such as Los Angeles and Chicago, and Walmart says it will be available to 30 million homes by the end of the year.
Delivery employees are examined by background checks and an average of 6.5 years of experience at Walmart before getting the job, Pegden said. They wear uniforms, drive electric-branded vans, access homes with an entry keypad or smart lock, and have a body camera to record the descent. The same two or three distributors usually visit a customer’s home.
Customers pay $ 19.95 a month or $ 148 a year for unlimited deliveries. It is independent of the company’s Walmart + service.
For Walmart, it’s a compelling example of how ordering online can become a routine part of life, Ward said. Customers give up control, so that the company can “keep them in stock so that the cereal is always …