Will Walmart sabotage itself with its pickup locker plan?

Walmart (NYSE:WMT) will install lockers in a dozen U.S. stores this summer to test whether that will make it faster and easier for customers to pick up online orders, the retailer said on Tuesday (March 26).

The move mimics Amazon.com's (NASDAQ:AMZN) storage lockers in some Staples (NASDAQ:SPLS), Rite Aid (NYSE:RAD) and 7-Eleven stores where customers can pick up merchandise they have ordered through the E-commerce giant. In Amazon's case, merchandise must be shipped to the store from an Amazon distribution center, then put in the locker for the customer to collect.

Walmart already has a site-to-store option, by which customers can pick up merchandise ordered online at a store. The lockers are intended to speed that up -- no standing in line, no waiting for a customer-service rep to find the right box. In theory, Walmart will transmit the locker number and combination to the customer, who will walk right in, collect the item and leave.

In reality, this could be much more interesting -- but only if Walmart does it right.

For example, for most orders there's no reason Walmart would have to ship an online order from a distribution center. If the items are already in the store, it could be filled from there -- and Walmart could beat Amazon's delivery time by days. In fact, Amazon has been shipping online orders from a small number of its stores for the past two years, and it will increase the number of stores doing that to about 50, according to Reuters, which covered the Walmart news on Tuesday.

With two-thirds of Americans living within five miles of a Walmart store, Walmart could conceivably offer the equivalent of same-day delivery at virtually no extra cost.

That, in turn, might encourage some customers to switch from wandering the aisles of Walmart to pick up a few things on the way home from work to ordering them online and picking them up from a locker, if only to avoid waiting in a checkout line. And shaving customers from checkout lines cuts the number of cashiers required.

That's how it could work. The problem: Walmart has already been cutting costs by cutting staffing at its U.S. stores. The result has been reports of shelves that haven't been restocked because there aren't enough associates to do that work. But collecting items off the shelves to fill online orders that go into the pickup lockers will require more associates, not fewer -- and if the pick-and-packing associates can't grab order items off the shelves but have to find the merchandise in the back, the whole process will take even longer.

There's no reason Walmart has to squander its site-to-store advantage. But if the E-commerce group in Silicon Valley and the bricks-and-mortar management in Bentonville don't start communicating, that's exactly what they'll do.

For more:

- see the Reuters story

- see this Bloomberg story

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