As part of the company’s push to increase profits by moving online shoppers into retail stores, Wal-Mart is now offering incentives for customers to pick up their orders instead of requesting home delivery.
For many items in the Wal-Mart online catalog, two prices are listed, one for ship to home and a second for ship to store. The ship to home option is slightly more expensive than the ship to store option, which Wal-Mart often price matches to Amazon.
This is just another installment of the longer-term retail game plan that CEO Doug McMillon set in motion after taking the reins in 2014. So far, Wal-Mart’s bets have largely paid out.
Investors Worried, McMillon Cool as a Cucumber
Despite the fact that Wal-Mart’s eCommerce sales rose 60 percent in the US in the most recent quarter, according to The Wall Street Journal, investors are still nervous about the money that seems to continue to be sunk into the behemoth. Over the past two fiscal years, Wal-Mart’s net income has declined, down 7.2 percent to $13.6 billion in 2016 alone.
This shrinkage has largely been due to the massive investments made in eCommerce infrastructure, employee wages and store improvements. Instead of building a glut of new Wal-Mart stores, McMillon has chosen to close more than 150 stores and will build just a dozen in carefully curated locations in the next fiscal year. The goal is fewer, but better, following the same trend many retailers are chasing—but with a twist.
Wal-Mart Eyes Amazon’s #1 Spot
McMillon also has his eye on Amazon. Because Amazon currently holds 43.5 percent of eCommerce market share, Wal-Mart can’t realistically topple the giant overnight with its relatively tiny 3.6 percent share, but its marriage of bricks and clicks has a similar amount of firepower as Amazon’s merger with Whole Foods. It’s just in the reverse configuration.
Wal-Mart is coming from pure retail, and Amazon from pure eCommerce environment; both have enormous distribution networks that can move products across the country in almost no time and service an unimaginable number of customers at once. Amazon should be watching its back as Wal-Mart catches up. The big box store’s U.S. eCommerce head assured investors in October that “this year should be the largest loss in eCommerce, and we’ll see slight improvement next year.”