In the clearest example yet of the kind of tech and ethos Walmart (WMT) wanted to get its hands on when it bought Jet.com for $3 billion last year, the retail giant is offering discounts for online orders of certain items that are picked up in-store rather than delivered to the home.
Starting next week, shoppers on Walmart.com will be able to get a break when they order eligible online but go retrieve them at a store, pocketing most if not all the shipping costs Walmart would have incurred to send those items to the customers’ home. The offer will start on April 19 with a selection of 10,000 items and then be broadened out by late June to 1 million kinds of products, none of which will available on store shelves but rather sent there from warehouses.
“We are removing one of the most expensive portions of e-commerce transaction, which is last mile delivery,” Marc Lore told Fortune in an interview. The CEO of Walmart’s U.S. e-commerce business and founder of Jet.com added: “It costs us less to ship to stores, so our customers should share in those savings.”
But it also gives Walmart more ammo in its price war with Amazon. Indeed, one of Lore’s mandates since become CEO of Walmart.com last year after selling Jet.com to the company has been to equip Walmart.com with tools to beat all rivals, even Amazon (AMZN), on price. Recode reported last month that Walmart had gathered many suppliers at a summit this winter, telling them it wanted the lowest prices on 80% of items sold.
Though still a small player, Jet.com has shaken up the world of e-commerce thanks to a pioneering discounting approach it calls the “Smart Cart,” who provides shoppers with additional incentives the more they order. Jet.com sweetens the pot for example by giving a discount if shoppers forfeit the right to return an item, or pay with a debit card instead of a credit card. It was exactly that kind of novel approach, and the tech that enables it, that led Walmart to buy Jet.com last summer to rejuvenate its e-commerce business.
The acquisition of Jet, along with an overhaul of Walmart’s marketplaces has kickstarted its e-commerce growth– online sales rose 29% during the holiday quarter. And with acquisitions of online stores like ShoeBuy, Modcloth and Moosejaw, Walmart is reaching for a broader clientele.
But Walmart still has a long way to go, hence the focus on blending stores and e-commerce. The use of 4,000 physical stores is becoming a hallmark of Walmart’s strategy against Amazon, locations that can help it speed up delivery and save on shipping costs and protect profit margins at a time a price war is pressuring them.
To access the pickup deals, Walmart shoppers can click on an item denoted “Pickup Discount” and later head to the store. The focus on beefing up the pick up service echoes Walmart’s efforts to use its physical stores and ability to offer pickup to spur online grocery sales, which it does at 600 stores now, with another 500 in the hopper.