Wal-Mart on Tuesday began the first phase of Site-to-Store rollout, where consumers can get free shipping online and pick up the merchandise at a local store.
The move is significant not merely because any move by Wal-Mart influences the rest of retail, but because it's an ambitious attempt to truly offer a multi-channel service. The idea is for the chain to leverage the convenience of its 3,300 stores (all of which are slated to participate "by late summer," Wal-Mart said) and marry it with the almost unlimited virtual inventory possible online.
"A key advantage of Wal-Mart's online channel is the ability to offer a much larger assortment of products through our virtual shelf space," said Wal-Mart.com's director of store integration, Mike Smith, "while our offline channel's key strengths include our nationwide footprint with more than 3,300 retail store locations and a world-class logistics network capable of efficiently delivering online products to customers at our stores."
The program is starting with a trial group of 750 stores in New Mexico, Arkansas, Oklahoma, Kansas, Nebraska, Missouri, and "select areas" of Texas, California, Colorado, Tennessee, Georgia and Mississippi, the retailer said in a written statement.
One downside of the program is the speed. Once ordered, Wal-Mart is only promising to get the purchased product into the store "within 7-10 business days after the order is processed," which can be more than two calendar weeks. The customer is then supposed to receive an automatically-generated E-mail saying that the item is ready for pickup.
Given the logistics involved in anything done by a $345 billion company, Wal-Mart has been testing the site-to-store program for three years.
"Our extensive testing of the site-to-store service allowed us to create a multi-channel shopping experience that brings additional assortment, convenience and value to our customers," said Raul Vazquez, Walmart.com's CEO. "We found that nearly two-thirds of the customers who used the trial service also shop in Wal-Mart stores on a weekly basis. Site-to-store not only offers these customers access to thousands of additional online products, but also gives them the added convenience of picking up those items at the store during their weekly shopping trips without paying for shipping."
Initially, only a limited number of products will be eligible, although that still translates to thousands of products impacted. Wal-Mart will mark eligible product pages to alert customers that the displayed product can be picked up at the store with free shipping. Consumers will be able to select the site-to-store option during site checkout, which will take the marketing move of displaying how much money was saved on shipping.
Wal-Mart is also trying to brand the program as ecologically friendly. That would be a hard sell for most retailers, but with a company as large as Wal-Mart, it might make an impact.
"The service also supports Wal-Mart's sustainability efforts. Transportation efficiencies have been realized by consolidating individual shipments into pallets and fewer trucks," a Wal-Mart statement said. "Also, system upgrades allow participating suppliers to consolidate multiple items of an order into single cartons, minimizing the total number of boxes needed."
From the consumer's perspective, this program is a sophisticated version of what some retailers?especially grocers?have done for decades, which is to place special orders for customers. If the product is available from a distributor the store already works with, the merchant would simply add that item to the existing bulk delivery. The customer would then pick up the item after the next regularly-scheduled delivery.
This program would presumably only be of value when dealing with products the brick-and-mortar isn't carrying. So just like the low-tech special orders of years past, this expands the inventory with product that is almost certainly going to be purchased.
It has the added benefit of giving Wal-Mart.com customers a reason to go to the store, where additional purchases are quite likely. This would be relevant to profits only when dealing with Wal-Mart.com customers who were not already Wal-Mart store customers.