Here’s why Walmart won’t discount holiday shipping
Walmart (WMT) is vowing not to be beaten on prices this holiday season, offering thousands of cuts that will last for the whole period.
But one area where the world’s largest retailer won’t offer customers a holiday break is online shipping. Walmart is keeping its minimum online order size for free shipping at $50. Last week, Best Buy (BBY) said it would waive its $35 minimum through early January, while Target (TGT), which has yet to announce any holiday plans, currently requires a minimum online order size of $25 to qualify for free shipping. Amazon.com (AMZN) offers free shipping to its Prime members.
Walmart.com CEO, Fernando Madeira, told reporters during a media briefing Thursday that a “vast majority” of the retailer’s online orders either qualify for free shipping or can be picked up in stores, a service for which Walmart does not charge a fee. Madeira dismissed the notion that Walmart was at a competitive disadvantage, noting that thousands of stores can be used for in-store pick-up, something Amazon cannot offer.
“When you look at the combination of e-commerce delivery to homes with a threshold of $50 and the in-store pick-up, customers are loving the way that we are doing this,” Madeira said.
Walmart is under particular pressure to perform well this holiday season. The company stunned Wall Street earlier this month when it warned of much lower-than-expected profits next year as it pours billions into e-commerce to catch Amazon, as well as beautify its stores, among other efforts. Last holiday season Walmart reported an increase in comparable sales of 1.5% in a hard-fought period.
The discounter said that this year, it’s opting for many more season-long deals, offering what it calls “rollbacks,” or discounts in layman’s terms, in thousands of products for the entire months of November and December. The strategy eschews “this-weekend-only” type deals that Steve Bratspies, chief merchandise officer for Walmart U.S., dismissed as “gimmicks” by other retailers.
Walmart will still continue to price match throughout the season.
“We will not be beaten on price,” said Bratspies, who just got the merchandise chief job this month, filling a position that had been vacant since last Thanksgiving. “If we need to react, we will react,” he continued in a shot across the bow at his rivals.