When consumers think of the hot, tech-driven companies dominating the emerging online grocery space, Walmart (WMT 0.57%) may not be the first name that springs to mind. However, the retail giant that built its business through massive brick-and-mortar locations has successfully extended itself into the digital grocery business, where it has outpaced all rivals, even e-commerce natives like Amazon and Instacart.
In fact, Walmart has 62% more customers ordering groceries online than No. 2 player Instacart, according to new research by Second Measure.
One key aspect of its strategy has been to avoid trying to force customers into a single model. Instead, the retailer acknowledges that consumers are driving the ship, so it gives them what they want, how and when they want it.
Stores remain at the center of Walmart's strategy serving as pickup locations and delivery hubs. Image source: Walmart.
Just be Walmart
Walmart Digital Operations Senior Vice President Tom Ward laid out how his company has approached digital grocery sales during his keynote address at Grocery Shop, a trade show for companies in the digital grocery industry. He made it clear that the retailer does not see any of its channels as robbing business from the others.
"Online grocery pickup and delivery at Walmart starts as a key convenience play for our customers. This isn't a binary decision for customers, he said. "When you introduce a new channel, people don't stop shopping at Walmart Supercenters and Neighborhood Markets."
Traffic, he noted, has continued to grow in the chain's stores. Consumers, he explained are looking to have the same value and convenience experience no matter how they shop with Walmart.
"The most important line on this whole slide," he said, referring to his presentation, "is that one on the top where it says 'the same low prices.' There are no hidden costs at Walmart. When you pay $2 for a box of Cheerios at Walmart on the shelf at a Neighborhood Market, it's the same as you pay in the Supercenter, as you would pay for pickup curbside, or all the way to your front door for delivery [outside of the charge for the delivery]."
That last paragraph seemed to be a dig at some of Walmart's rivals, which sometimes charge higher prices for items sold as part of delivery or mobile pickup orders. Ward did note that its curbside pickup and home delivery orders -- which are both "picked" by the same 45,000-person workforce -- do add to the company's expenses.
The order pickers, he noted, go through extensive training, because 90% of items ordered online for pickup or delivery are fresh. That makes the human component essential -- shoppers will be far less likely to use those services again if they don't like the look of the produce or meat that's selected for them.
Walmart mobile order and pickup will cover 78% of the country by the end of the year. The chain has also launched Delivery Unlimited, a membership program that offers unlimited grocery deliveries for $98 per year or $12.95 a month from 1,400 stores. Nonmembers can also use the service on a fee-per-order basis.
It's all about the customers
Ward explained that Walmart uses data to improve its internal processes and to deliver a better experience for customers. One example of that is showing people who use the app to place orders "less busy" times of day that they could pick them up. A shopper, could of course, still request a pickup at a busy time, but if they select a quieter period, they benefit by getting a more pleasant and efficient experience, and Walmart benefits because it spreads out the demands on its staff.
Walmart also allows customers to opt into telling the chain when they're on the way to pick up an order.
"The vast majority of customers that place the order with Walmart, check-in before they leave home, leave work, wherever it is that they might be and tell us they're on their way," he said. "...This helps them get in and out of the store really quick, and it helps the store team consolidate their order, so that the moment they pull into the area, we're there with their groceries."
It's a formula driven by customers and allowing them to choose how they want to shop. That's a true omnichannel model which can flex as demands change. If more people want delivery rather than pickup, for example, the infrastructure for both is the same, and Walmart can adjust in a way that is essentially invisible to the customer.
