BENTONVILLE, Arkansas — Walmart’s cavernous stores are known for low-cost groceries, paper towels, and apparel.
Now, those big boxes are the heart of its e-commerce business, acting as launch pad for delivery drones, Automated warehouse for online grocery orders And Departure location for direct-to-fridge drop-off, Eventually, they’ll help pack and ship goods for individuals and independent companies that sell through their third-party marketplaces on Walmart’s website.
“The store is becoming a shoppable fulfillment center,” said Tom Ward, chief e-commerce officer at Walmart US, in his first interview. step into the role, “And if the store acts like a fulfillment center, we can ship those items to the shortest distances in the fastest time.”
Walmart is leaning in two key advantages to running its e-commerce business: its nearly 4,700 stores across the United States and its dominance in the grocery business. Ninety-nine percent of Americans live within 10 miles of a Walmart store. The company is the largest grosser in America by revenue. Walmart is looking to expand its assortment of merchandise, improve the customer experience, and increase the density of distribution routes to turn e-commerce into a bigger business.
The COVID-19 pandemic created an opening for Walmart to expand its online business. The retailer’s e-commerce sales grew, helped in large part by the curbside pickup service, which began years before other retailers scrambled to set up during the pandemic. one dollar out of $4 that american Last year the spend on click-and-collect orders went to Walmart – More than any other retailer, as estimated by Insider Intelligence.
The global health crisis also fueled a sense of urgency to better compete with Walmart heroine, the clear leader in e-commerce. Amazon has a 39.5% online market share compared to Walmart’s 7%, according to estimates by research firm eMarketer. Last year, based on a 12-month period from June 2020 to June 2021, consumers spent more money on Amazon than the big box retailer for the first time, according to company filings and estimates from financial research firm FactSet.
But the e-commerce environment has turned tough in recent months. benefit is dramatically slow down As more customers return to the stores. Even Amazon saw steady numbers in the most recent quarter, reports it Slowest sales growth rate in nearly two decades,
Plus, as Walmart fuel and freight costs mount And Inflation at nearly four-decade highCustomers are buying less of the usual merchandise like new clothes, as more of their money is going towards groceries and gas. Margins are low in food sales, which makes it difficult to profit from online sales.
Walmart’s Shares plunged last month, as it missed quarterly earnings expectations and lowered its outlook for profits. It marked the retailer’s worst day on Wall Street since October 1987.
Even with that background, Ward said Walmart benefits from having a reputation for value. “Price is important to our customers,” he said. “They trust us to bring you the lowest prices. And they have over 60 years of experience managing this business.”
leaning on the shops
Walmart US chief e-commerce officer Tom Ward said he wants to make it easier for customers to shop however they choose. To do this, Walmart is using thousands of its stores to speed up delivery and lower costs for the company.
Erin Black | CNBC
Ward said his approach to the business is straightforward: increasing sales online while making it easier for customers to shop however they choose.
The company’s large number of stores allows Walmart to get ahead of its competitors, he said. For example, a retailer might locate the nearest store to a customer who searches online for a printer. Instead of shipping the printer to a fulfillment center hundreds of miles away, a team of personal shoppers at the store can pack it up, send it to a delivery driver in Walmart’s network, and send a notification to let the customer know that the product is on the way. ,
“They may come just hours after buying it online, as it did a few days later,” he said. “So it’s a transformative experience in terms of momentum, which is really hard to replicate without that great footprint we have.”
Walmart has 31 fulfillment centers across the US — but more than 3,500 stores, or about 75% of its total locations, fulfill online orders that would otherwise be routed through a fulfillment center. What’s more, the company said it can reach 80% of the US population with same-day delivery.
Walmart hopes that using its store will attract third-party sellers as well.
Independent sellers who sign up for Walmart’s third-party marketplaces can pay for Walmart Fulfillment Services, a business that provides supply chain services from storage to shipping from the retailer’s warehouses. That division is led by Amazon veteran, Jere Buckley-Cox.
According to Buckley-Cox, Walmart will soon begin packing and shipping goods from stores to third-party sellers, making delivery faster and more cost-effective. It didn’t specify a timeline for that service, but said it was coming “in the near future.”
Sellers who gain popularity on the company’s website also have a chance to store shelves, he said.
online development
The rapid pace of online shopping through Walmart’s website and its app has added to some of its challenges.
The retailer had two apps – one for online grocery shopping and the other for general merchandise, from socks to camping chairs. Last summer, it merged the two together into a single app.
The company also had different teams of buyers for its store and website, which led to conflicting assortment and pricing. two teams mixed into one Shortly before the pandemic.
In addition, some customers were confused or frustrated by Walmart’s strange ways of completing purchases in the same online order. This spring, a member of Walmart’s e-commerce team experienced a first-hand experience when ordering dinner ingredients for Taco Tuesday. Taco fixings arrived that day via home delivery, but taco seasonings arrived in the mail days.
Over the past two weeks, Walmart has made a change to eliminate that issue, Ward said. When customers activate the app to make a purchase, they choose whether they want the item via shipping, pickup or delivery. That choice is made, depending on which items the assortment is tailored—like taco seasonings—actually at hand.
Walmart Stores Inc. in Bethlehem, Pennsylvania. Inside the fulfillment center a package moves along a conveyor belt.
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 unravel all the magic behind the scenes and make it intuitive so that they can buy a filet steak and a bag of apples and a T-shirt and a microwave and they can get it done anywhere they want it. want to complete.”
Another emerging piece of Walmart’s plans is its drone delivery service, which Walmart It will expand to 37 stores in six states by the end of the year. According to the company, this development will enable it to reach 4 million homes.
Down on the ground, Walmart wants every delivery driver in its network to have densely packed routes with multiple stops in every neighborhood. Because of that commitment GoLocal. was launched Last yearwhich allows mom-and-pop shops and publicly traded companies, including home depotto use Walmart Independent Drivers To stop online purchases.
“A driver can pull up to one of our stores and get a handful of packages for Walmart customers, then they can pick up a handful of packages for customers from a different business or company, then they go down a highly customized route. which takes advantage of that density and reduces costs,” Ward said.
Its membership program, Walmart+, is another way the retailer is trying to get more online sales. The $98-per-year service includes free home shipping for online purchases and free grocery delivery for orders of $35 or more. On Thursday, Walmart kicked off Walmart+ Weekend, a new sales event that resembles Amazon’s Prime Day, with deals available to members only.
Walmart in your home
An important part of a retailer’s e-commerce strategy depends on a high level of customer trust.
With Walmart’s InHome service, employees go to strangers’ homes and put food directly in the fridge or on the kitchen counter—often leaving a sticky note to thank customers for their business and remind them to stop. went.
With groceries, customers can order clothes, toys and other items that are delivered at home. They can also leave returns for Walmart employees to take back to the store.
“People really tend to think of their InHome colleague as an extension of the team that is helping them get through their work week or their home week,” said Whitney Pegden, InHome’s vice president and general manager. “And so they’re like, Oh my god, here you are, can you walk the dog? Can you take out the trash?”
service is Expansion to major cities including Los Angeles and ChicagoAnd Walmart says it will be available to 30 million households by the end of the year.
Pegden said delivery workers are background checked and have an average of 6.5 years of experience at Walmart before they get the job. They wear uniforms, drive branded vans powered by electricity, access homes through entry keypads or smart locks and carry a body camera to record drop-offs. The same two or three delivery people usually go to the customers’ homes.
Customers pay $19.95 per month or $148 per year for unlimited delivery. This is different from the company’s Walmart + service.
For Walmart, it’s a compelling example of how online orders can become a regular part of life, Ward said. Customers delegate control, so the company can “keep them in stock so the cereal is always there, the milk never runs out.”
– CNBC Katie Schulov And Erin Black contributed to this report.