Walmart (WMT 0.91%) continues to forge ahead with its digital strategy. But rather than avoiding Amazon (AMZN 1.74%), it is directly taking on the online retail giant.
It recently announced a deal that will undoubtedly help draw online buyers by making returns easier, making the entire process more convenient. With its low prices and an improving digital presence, Walmart is moving forward with its omnichannel strategy that will keep the company strong for the coming years.
Walmart has been emphasizing e-commerce for a number of years. It has continued to push faster delivery times and greater convenience for its customers, including next-day delivery, same-day delivery for grocery items, and same-day pickup at many of its stores.
Walmart+, its subscription service launched a few months ago, continues in this direction. For $12.95 per month or $98 a year, subscribers receive fast delivery, a quicker checkout process at the stores, and discounts on gas. While management didn't release subscription numbers on its latest earnings call, one study estimated that 11% of Americans signed up within two weeks of Walmart initiating the service.
With the pandemic, Walmart's customers are increasingly turning to online shopping. Fortunately, the company has been setting up the infrastructure for some time, allowing shoppers to continue purchasing its low-priced goods. In its fiscal third quarter (ended Oct. 31), U.S. same-store sales rose by 6.4%. But this was largely fueled by e-commerce, with the 79% increase responsible for about 90% of the comps' rise.
Making returns easy
In late December, Walmart announced that it took the next step in its omnichannel approach. Working with FedEx, customers can return their merchandise in a number of ways. You can fill out the information online or via the app, and the delivery service will pick it up from you at the scheduled time. Or, you can bring it to a FedEx location. Either way, it sends your return back at no charge to you.
Why is making returns cheap and easy important? While Walmart's approach allows customers to buy merchandise how they want, this process also gives them a greater reason to shop at Walmart stores or online, since they know it is convenient to return unwanted goods.
It also allows Walmart to keep up with Amazon, which offers return options at Kohl's stores, United Parcel Service's locations, and Amazon lockers.
Of course, just because it makes it easier to order and return goods online doesn't mean people will flock to Walmart. However, its low-priced offerings are already popular, with 265 million people shopping at its stores and online every week. Offering free and convenient returns is another step in Walmart's evolution to allow its customers to shop how and where they want.
When paired with attractively priced merchandise, the combination is powerful and will continue fueling Walmart's strong sales and profitability.