Walmart makes returning stuff a digital differentiator

SUMMARY:

Being able to return unwanted goods in-store in less than 35 seconds – Walmart’s latest digitally-enabled program to take on the threat of the Amazon nemesis.

Doug McMillon

If there’s any doubt remaining about the potential competitive differentiator of offline real estate as part of an omni-channel retail strategy, look no further than Walmart’s latest digitally-enabled offering.

As part of its investor briefing day on Monday, the retailer announced Mobile Express Returns, the latest addition to its Mobile Express portfolio. What this latest iteration does is to allow customers to kick off returning unwanted goods by scanning them with a smartphone, then complete the process in-store by dropping them off at a customer service desk. Walmart says that this should mean that returns will take 35 seconds or less.

Customers will use Walmart’s app to get a QR code for their return before they go to the store. They will then scan the QR code at a dedicated Mobile Express Lane inside a Walmart location to immediately refund the purchase. In addition, from December, certain products, such as cosmetics and cleaning supplies, may not even require a physical return!

As well as driving more downloads of the Walmart app, the new initiative is intended to get users inside a physical store. And once a customer is through the doors to make a return, there’s a better chance that he or she will make a futher purchase, so there’s upsell and cross-sell potential here as well, with the cost of the refund process offset by increased sales volume.

Being able to return an online purchase in a store lets customers get refunds credited to an account instantly, rather than having to wait for the item to be returned in the mail, said Daniel Eckert, senior vice president of Walmart Services and Digital Acceleration:

We know that returning an item and waiting for a refund, especially for a product purchased online, isn’t always seamless, so we’ve completely transformed the process for our customers — whether they are shopping in stores or at Walmart.com. By leveraging our physical stores and the Walmart app, we’re changing the returns game in ways that only Walmart can do.

Walmart reckons to have a store within 10 miles of approximately 90% of the US population, a boast that retail nemesis Amazon cannot make. Amazon has partnered with Kohl’s in Los Angeles and Chicago, where customers can drop off goods bought through Amazon at Kohl’s stores at no cost.

Digital drive

The refund scheme is the latest commitment by Walmart to digital investment, which CEO Doug McMillon believes will deliver a 40% increase in the firm’s US online sales next year. For the fiscal year ending January 2018, online sales should total around $11.5 billion. McMillon told investors:

No doubt we are in a transformational period of history. Our future is looking more digital.

To reach that future, Walmart has splashed its cash, most notably the $3.3 billion acquisition of jet.com. But alongside that major purchase has been a series of tactical buys, including Shoes.com, Moosejaw, ModCloth and Bonobos.

With those under its corporate belt, Walmart’s been rolling out more and more digital initiatives, including:

  • Deploying digital kiosks called Pickup Towers at a hundred of its stores which dispense products bought on Walmart.com.
  • Piloting a scheme which allows delivery people to use digital keys to deliver goods when the householder isn’t at home.
  • Offering free, two-day shipping for online orders of its most popular items with a minimum purchase order of $35.
  • Hiring 250 out of a planned 2000 product specialists to manage the online merchandising of the company’s top 1 million SKUs. Each product specialist is responsible for the presentation and pricing of a class of products online.
  • Expanding the number of US stores that allow online grocery shoppers to pick up orders at the curb to 1000.

Walmart’s US e-commerce chief Marc Lore picks out online grocery shopping as a priority focus of attention:

It starts with fresh. It starts with consumables. If you can offer fresh produce and consumables at the best possible price, with a really good experience, whether it be for pickup or delivery, then you have a good chance of building a longstanding relationship that you can then use to sell the rest of general merchandise.

As for the physical stores, the vast network is (rightly) pitched as a competitive asset, but adding new outlets is going to slow down. Walmart plans to open only 25 – 15 Supercenters and 10 Neighborhood Markets – in fiscal year 2019, compared to 230 during fiscal 2016.

But it does plan to open 1000 additional locations dedicated to packaging and delivery of products ordered online. McMillon is convinced that the vast majority of grocery transactions will be done by customers shopping in stores for a “long time to come”, despite the drive to increase pick-up and delivery options:

If you think about the Supercenters, they are largely built out…There will still be a few opportunities to do a few here and there.

So for now, store expansion is on the backburner and what new physical investment there is will be dedicated to support of digital capabilities. McMillon confirmed:

We may come back to [store expansions] later, but we are making a deliberate choice that we are going to win in e-commerce.

My take

Walmart’s stock price had a healthy uptick on the back of the e-commerce update, indicative that Wall Street sees the firm as betting on the right rolls of the dice. That said, Walmart’s e-commerce revenue contribution remains a low single digit element of the total turnover, so this is paying forward in a long game.

For now, Wall Street will still have its Amazon blinkers on when it comes to contemplating retail e-commerce. Or as Moody’s retail analyst Charlie O’Shea puts it:

We still believe Amazon’s lead in online retail is insurmountable. However, Walmart continues to widen the gap between itself and all other brick-and-mortar retailer by leveraging its unmatched physical resources.

Image credit - YouTube

    1. Rick Bullotta says:

      Not a huge differentiator for me. Amazon makes it super easy, with lots more dropoff locations (UPS and USPS locations). Plus I get the refund shortly after the package is scanned at the UPS store, not when Amazon actually receives it.

      However, if Walmart wants to deal a blow to Amazon, they should focus on delivery accuracy. Amazon has really slipped in this regard. 30-40% of my orders show up 1-2 days late (usually because they shipped late from the warehouse), lots of orders reporting as delivered don’t show up until the next day, and so on.

      And I just received an Amazon delivery of some Apple Air Pods that were – get this – USED. Who would sell/buy a USED set of in-ear phones? Yuck.

      Anyway, Bezos and crew do need to get their act together, so any competition is a good thing. But this probably isn’t the “game changer” feature!

      1. says:

        There is definitely a difference between Amazon US and Amazon UK. When I was in the US, the delivery folk almost never knocked on the apartment door but simply left stuff, sometimes in the wrong place, even when it said ‘signature required.’ In the UK? Much better and we’ve not seen a late delivery yet. That’s impressive. It only gets sketchy in the UK when the merchant is using some no-name delivery service or UPS (which I hate with a passion) that things go pear shaped more often than not.

    2. says:

      Still Day One even at this frenetic pace. I was amazed to see what Amazon did for me in Delhi. I ordered an iPad and a case for my family in Delhi. It was delivered in 3 hours. I found I had ordered the wrong case. So I did an online return and also ordered a replacement. The new order was delivered on the same day as well. The return was also picked up from my home the same day and refund hit my bank the next day. No label printing and no driving down to a Kohl store or UPS required.

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