Walmart uses $10 discount to build online order pickup traffic

Walmart (NYSE: WMT) built its immense retail empire on discounting. Now to get consumers to use its online grocery ordering and store pickup test, it is offering $10 off a shopper's first order of $50 or higher at stores with the service.

The retailer used targeted emails to Walmart.com customers in areas where it is piloting the program. These are San Jose, Calif., Huntsville, Ala., Phoenix and Denver, as well as its home base of Bentonville, Ark., where it is testing a dedicated Pickup Grocery format with no other retail operation.

Food retailers have had a difficult time getting customers to start using online ordering, whether it is with delivery or in-store pickup, although it is much more accepted now than in the 1990s when it was first tested. Improved computers, mobile devices and faster home Internet speeds are part of the reason, along with a population that has grown comfortable with using the Internet to order goods and services.

The retailer hopes the discount will kickstart its online grocery shopping and pickup program. The $10 offer went out on March 24 and was good through March 26. It represents a higher offer than a $5 discount voucher the company had recently given customers.

Walmart is trying new ideas for the online ordering and pickup format, but the company declined to comment on the discount promotions. "We are testing many things and we're continuing to learn from our customers," said Betsy Harden, a Walmart corporate spokesperson, told the City Wire.

While no numbers were available about the standalone Pickup Grocery format, Harden said the Pickup Grocery system in Denver has been tested for over a year, and about 80 percent of the orders are now from repeat customers.

With the discount promotion, Walmart is likely trying to drive traffic to its Pickup Grocery, and collect information on how shoppers use it, said Carol Spieckerman, CEO, newmarketbuilders.com.

"In my experience using the Pickup concept, I've encountered many shoppers who rely on it to the exclusion of other formats, so Walmart would seem to already have solid examples of how its Pickup Grocery is driving loyalty," Spieckerman said. "It remains to be seen how or if Walmart will deploy the format in other regions, but in the meantime, the insights gained are surely being parlayed into its other businesses."

Online grocery shopping is more established in the United Kingdom, where Walmart owns the ASDA chain. Pickup locations are gaining popularity across Europe, said Judith McKenna, who is now COO of Walmart U.S. but formerly spent time with ASDA.

Eighteen percent of British online grocery shoppers now use home delivery and pickup options, said Stewart Samuel, an analyst with British research company IGD. The majority of those customers prefer home delivery, but the popularity of pickup is growing.

For more:
-See this City Wire article

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