Walmart's CRM Gateway: Mobile Checkout?

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Walmart's two-day trial last week to test in-aisle mobile checkout was about everything other than accelerating the checkout process. The chain saw it as delivering everything from a back door into a CRM system (which Walmart has never had) to making coupons and other incentives several orders of magnitude more effective and even gathering in-store geolocation data for marketing analysis. ("We may have sold 50 TVs this week, but based on the number of people standing by that area for more than six minutes, it looks like we need to tweak pricing more.")

When Walmart quietly (was it really intended to be quiet? More on that in a moment) ran this test at one store near the Bentonville mothership, many compared it with the chain's self-checkout efforts. But this setup's advantages make that particular function of minimal interest. Still, it's the most palatable explanation to offer shoppers.

The test at that one store did not involve any customers and only allowed employees—and their "friends and family"—to participate. Given that it was an extremely limited test (two days, one store, no customers, iPhone-only), it's by no means indicative of how the chain would actually use the technology. With that disclaimer out there, this is how the trial worked.

Shoppers scan each item as they work their way through the aisles. In this way, it enables real-time promotions, delivered at a point in the process where they are quite likely to change purchases—either to more profitable products or to those where the chain has a manufacturer incentive.

As StorefrontBacktalk was—shameless plug alert—quoted saying in The Wall Street Journal on August 31, this approach could effortlessly offer a coupon for a rival peanut-butter brand with a 75-cent off coupon. (If that Wall Street Journal link doesn't work for you, here's a screen capture of that page.) Done at checkout, it will likely be ignored, forgotten or lost (and perhaps all three). The chance of a large number of shoppers bringing that coupon back the next shopping trip is small. But if that offer is made while the shopper is still in the peanut-butter aisle? Much more compelling.

Back to the process. When the shopper is done and has filled a cart with dozens of items, she pushes the cart to the existing self-checkout lane. Given that the products have already been scanned, all that the shopper does is scan the single 2D barcode from the Walmart mobile app into the self-checkout system. That code includes the scans for all the products in her cart. The shopper then pays for the purchases through the self-checkout system, either swiping payment cards or paying with cash, whichever the machine accepts. The self-checkout POS prints out a regular hard-copy receipt and the order is complete.

It's unclear how the process would deal with standard self-checkout security issues. Age- or quantity-restricted items (cigarettes, alcohol, some OTC pharmaceuticals, etc.) would presumably generate the same associate interventions as they do at today's self-checkout systems, handled by the associate overseeing those self-checkout lanes.

Shoplifting issues would be a little trickier. Unlike traditional self-checkout orders, the overseeing associate—and, for that matter, security cameras—would not have the opportunity to watch shoppers scanning items because that scanning happens through the mobile device back in the aisles. So if someone—intentionally or unintentionally—didn't scan (and, therefore, pay for) all the items, there's no immediate trigger.

It would likely need to fall back on the random (or perhaps even complete) checking of receipts at the door, comparing the receipt list with the cart contents. Security cameras in the aisles would also likely watch for shoppers using the mobile app and then deliberately not scanning items placed in their carts.

To be clear, this process absolutely would accelerate checkout, given that a 58-item shopping cart would be scanned in literally the time it takes to scan a single barcode. That checkout acceleration, though, is simply not one of the most attractive aspects of this mobile program. It's clearly attractive, but the other benefits have much greater strategic benefit.It's clearly attractive, but the other benefits have much greater strategic benefit.

Of all the various mobile benefits at play here, CRM is the most intriguing. It's a logical and natural consequence of the mobile program. Of course the app knows who the customer is—and if it didn't, it would be able to do the linkage the first time a payment card is swiped.

But mobile CRM is potentially much more exhaustive than plastic CRM. Not only does it include every item scanned, but it would know every item scanned and then put back (deleted). It would know how long that item had been in the cart and exactly where customers were when the decision was apparently made. Did some signage change their mind? Was it a different product? Was it when the customer was near a free sample area? And if it was mobile signage, the system could look up to determine the exact ad being delivered at that exact moment.

How's this for scary? Did two shoppers (each using mobile checkout) stop and seem to talk with each other? And did that immediately precede the product purchase changes? Is that other shopper—who is also known—an influencer?

I promised to get back to the quietness of this test. The program leaked out because of an August 27 6:06 AM memo sent to area Walmart employees. The memo—marked both urgent and Walmart confidential—was asking for volunteers and it seemed to allude to an unsuccessful earlier effort to recruit volunteers. "My apologies for the last-minute plea, but the invitation strategy we'd counted did not come through last week. So now it's a bit of a last-minute scramble," the Walmart Labs person wrote.

Here's the odd part. The details of the offer were in an unsecured page at SurveyMonkey. If Walmart truly wanted to keep this effort quiet, that's a very odd choice of where to store the details. The other odd part is that the memo was leaked to various media—including Reuters and The Wall Street Journal—almost simultaneously. Walmart also issued statements to quite a few media outlets confirming the details. All told, this is decidedly not how Walmart deals with sensitive matters it wants kept quiet. (And, yes, we at StorefrontBacktalk have a wee bit of experience dealing with Walmart on matters it wants kept quiet.) The possibility that Walmart wanted this information leaked nationally so that it could gauge consumer reaction is far from remote.

This mobile effort from Walmart is an exciting indicator of where mobile could go, especially with the world's largest retailer seriously considering it. Is this related to Walmart's leading the multi-retailer mobile Merchant Customer Exchange (MCX) effort? Is this new comfort with mobile related to Walmart's newest and youngest board member, Google veteran and now Yahoo CEO Marissa Mayer?

No matter who is behind these modernization moves, it's a change that should be applauded. And, more importantly, copied.