You are using an older browser version. Please use a supported version for the best MSN experience.

Wal-Mart will pay you to go into its stores ... sort of

CNBC logo CNBC 4/12/2017 Krystina Gustafson

UP NEXT
UP NEXT

For Wal-Mart (WMT) shoppers, it will soon pay to go to the store.

Starting next Wednesday, the world's largest retailer will give customers a discount on 10,000 online-only items if they pick them up in-store. By the end of June, the service will be rolled out across more than 1 million items.

Price cuts will vary depending on the product's size, cost and category, Marc Lore, president and CEO of Walmart U.S. eCommerce, told CNBC.

"The point is that it's meant to be equivalent to what the last-mile delivery costs are," Lore said.

Last-mile delivery refers to the final step of the shipping process before it arrives on a customer's doorstep. It is the most expensive aspect of filling online orders, sometimes exceeding 50 percent of an item's total delivery cost, according to McKinsey & Company.

The retailer will use the technology pioneered by Jet.com, the website Lore founded and sold to Wal-Mart last year, to calculate the savings. Eligible items will be noted on the company's website and will not include third-party products sold on the marketplace. Orders will be filled within two days.

Wal-Mart shoppers will snag a bigger discount on inexpensive but heavy items, which are costlier to ship than small products that carry a high price tag, Lore said.

Aside from the cost savings, getting shoppers to pick up an order in-store boosts foot traffic — and gives retailers a second chance to make a sale. Though Wal-Mart does not provide specifics on those trends, Target (TGT) has said that one-third of its shoppers who pick up online orders in store buy additional merchandise when they arrive.

Wal-Mart has beefed up the staffing at its pickup desks to handle the uptick in volume. It is also testing a high-tech vending machine where shoppers scan a barcode and have their items spit out in less than a minute.

Wal-Mart's in-store pickup deal is just the latest way Lore has modernized the retailer's online business since he arrived last year. In January, the company reduced its free shipping threshold from $50 to $35 and shortened its delivery window to two days. That compares with its previous three- to five-day promise.

The discounter has meanwhile taken steps to fuse its online technology with shoppers' store visits. They include rolling out a service that allows Walmart.com shoppers to schedule a pickup time to have their groceries loaded into their cars.

Meanwhile, Wal-Mart has snatched up niche retailers ModCloth, Moosejaw and Shoebuy. These acquisitions will help Wal-Mart bring unique, higher-margin products to its assortment and build its expertise in specialty categories, Lore said at the Shoptalk conference in Las Vegas last month.

At that same conference, Wal-Mart announced an innovation hub called Store No 8 that will invest in future retail technologies.

So far the company's work is paying off. Wal-Mart's domestic online sales rose 29 percent last quarter and it's seen an uptick since changing its free shipping policies. Still, it has a lot of work to do if it wants to catch up with Amazon — something Lore told Shoptalk attendees his company aims to do.

"Win means win," he said in Vegas. "It's not going to happen in 12 months, but win means win."

AdChoices
AdChoices

More from CNBC

image beaconimage beaconimage beacon