Wal-Mart's version of the virtually ubiquitous buy-online-pickup-in-store strategy has reduced customer shipping costs by $5 million while sharply increasing new customer acquisitions and in-store upsells, according to figures released Tuesday from the world's largest retailer.
In announcing that it is extending its Site-to-Store program to more than 3,300 stores in the U.S., Wal-Mart released a handful of carefully selected stats to show that its approach to the strategy is working.
Wal-Mart's approach is slightly different than the traditional approach, which uses the Web to help move in-store merchandise. The twist to Site-to-Store?which was launched in March--is that Walmart.com promotes "tens of thousands of products" that are not available in stores and then offers to ship them free to a local Wal-Mart.
Since the launch, about one-third of all Walmart.com sales have beeen placed through Site-to-Store, Wal-Mart said.specifying that " More than half-a-million total units have been shipped through Site- to-Store, saving customers more than $5 million in shipping fees."
On the new customer acquisition front, Wal-Mart's statement said that "more than 50 percent of Site-to-Store orders [came] from new customers who make their first purchase at Walmart.com using the service." The chain also reported a 20 percent increase in the number of Site-to-Store "customers who spend an additional $60 on purchases in the store when picking up their orders."
In the environmentally green arena, the $345-billion chain reported a weekly gasoline savings of 1,000 gallons and a monthly box reduction of 20,000 "as a result of transportation and packaging efficiencies."
That last claim caught the attention of veteran retail observer Jeff Roster, a Gartner research VP specializing in retail.
"People save on shipping costs only to put some of it back into costs to drive to the store to pick up the merchandise. For me, it?s about convenience. I want to make sure the kayak is there along with the size 14 shoes I saw," Roster said. "Given the mileage I get on my crew cab truck, I didn?t save much. But the idea that green initiatives are gaining traction is fascinating. This could have a major impact on store design, logistics and definitely IT. This will also force IT service providers to embrace green IT as a manufacturing as well as a marketing strategy."
As for the other figures Wal-Mart released, Roster applauded the progress, especially the claim about customers spending more on-site. "If people are going to drive to the store, they are going to make incremental purchases," Roster said. "It is just another indication at how nimble Wal-Mart is."
Greg Buzek, the president of the IHL Consulting Group, said that while he "loves the idea" of using this tactic to get customers into the stores?and also to help Wal-Mart compete with those who want to compete on pure price?he wasn't clear from the released figures whether the additional $60 referenced was actually new money or not.
"The question is whether those people would have been at the Wal-Mart anyway. If they were planning to be there anyway and spend the $60, then this is no big deal," Buzek said. "If they can quantify that this was an additional trip and that they spent $60, then that is huge. I can?t tell" based on the figures Wal-Mart released.