A new forecast from Forrester Research credits greater online spending by Canadians, lower shipping costs and more selection for the spending increase.
Building on its expertise in logistics, Wal-Mart Stores Inc. is rolling out a “Site to Store” program that lets shoppers order products on Walmart.com for pick-up at Wal-Mart store. The program saves online shoppers from paying for shipping, though experts say Wal-Mart have to improve on its promise to ship to a store within 7 to 10 business days.
Wal-Mart Stores Inc. is breaking down the boundaries between online and in-store shopping as it rolls out a “Site to Store” in-store pick-up service for Walmart.com shoppers.
The boundaries are coming down so well that Site to Store sales at stores conducting pilot projects tripled from 2004 to 2005 and again from 2005 to 2006, says Mike Smith, Walmart.com’s director of store integration.
The move serves notice of Wal-Mart’s multi-channel intentions, says Patti Freeman Evans, senior analyst at research and consulting firm JupiterResearch. “This is one of their most significant steps to acting like a multi-channel company,” she says.
Wal-Mart began rolling out Site to Store as a permanent service last month to 750 stores in 12 states and expects to reach 3,300 stores by the end of this summer. It enables customers to buy a product online and have it shipped for free to a physical store in seven to 10 days.
The service aims to make shopping at Wal-Mart easier, Smith says. “Two-thirds of our online customers visit a store once a week anyway,” he says, making it easy to pick up purchases made on the web site. Wal-Mart also expects shoppers to embrace a combination of low prices and free shipping, he adds.
Other retailers have been running similar in-store pick-up services, but some take several weeks to deliver products and others charge for the option, Freeman Evans says. Retailers with similar programs include REI and J.C. Penney, she adds. There aren’t many.
“Most companies can’t manage the logistics,” she says. “They don’t have the capabilities to hold merchandise for pick-up.”
Bigger product selection
But even Wal-Mart may not impress many online shoppers accustomed to relatively fast home delivery with its promise of shipment to a store within seven to 10 business days, says Jim Okamura, senior partner at retail consultants J.C. Williams Group Ltd. “They may be forced to move that up,” he says.
Smith counters that the Site to Store delivery time matches Wal-Mart store shoppers’ habits. “If most of them are in a store once a week, it fits for them,” he says.
The new service also gives Walmart.com customers in-store access to many more products than are typically available in stores, Smith says. So far, product categories available online for in-store pick-up include baby, electronics, home furnishings and sports. “We have seen greater interest in baby products and electronics and so we see this as a way to complement online what’s in the stores,” he says.
Products available through the Site to Store program are also higher ticket-and sometimes bulkier-items, such as electronics and furniture. The selection could reflect a move toward more upscale offerings, Okamura suggests. “Wal-Mart might be seeing how much they can elevate product assortments to ‘ better and best’ products rather than ‘good and better,’” he says.
The Site to Store service is sound in concept, Okamura adds. “They aren’t cannibalizing their store sales. And there are a lot of people who will buy more products in the store while they are picking up an online order,” he says.
Shot across the bow
But because Wal-Mart stores are designed to be efficient in space, the retailer will have to leverage its inventory management expertise to accommodate online shipments. “It’s really in getting the back of the store running efficiently that will make this work,” Okamura says.
Smith concurs that the company’s logistics network is the key to success. “Our trucks go to each store every day and we’ll be able to ride those trucks to get packages in the door,” he says.
Wal-Mart’s service might be a shot across the bow of other large retailers, but they aren’t likely to dive in quickly unless they’ve already laid the groundwork. “Other big players will slowly test their versions, but this won’t create a stampede because back-end processes take a year or two to build, and that’s just to get to the pilot stage,” Okamura says. “Most of them have probably considered this approach and now maybe they will ask themselves if it’s time to test it.”
They better, experts say. “We know about the cross-channel sales numbers for the future: Nearly 50% of all purchasing will be transacted-or influenced-online,” says Freeman Evans.