Walmart using discounts to drive BOPIS grocery biz

Discussion
Mar 25, 2015

Walmart has always been about low prices, so it shouldn’t come as a big surprise that the retailer is using discounts as a means to drive traffic for its buy online, pickup in-store (BOPIS) grocery tests at stores in Denver, Huntsville, Phoenix and San Jose and its Pickup Grocery concept in Bentonville.

According to a report by The City Wire, Walmart has used targeted e-mails to attract new shoppers to the service. In Northwest Arkansas, Walmart recently offered consumers a $10 discount on their first order of $50 or more. According to the report, it had previously offered a $5 discount to the same prospects.

Walmart has been aggressively using price to put distance between itself and its competitors. According to Credit Suisse, the price gap between Walmart and its competitors on consumables grew to 17.9 percent in January, up from 17.2 percent in December and the one-year average of 16.2 percent.

Walmart spokesperson Betsy Harden told The City Wire that the company continues to learn what will work best with its customers. She said about 80 percent of orders in Denver are from repeat customers.

How important an element is price currently in the success of BOPIS grocery sales? Will Walmart’s involvement change the way American consumers view BOPIS grocery? Do you expect Walmart to expand its BOPIS grocery business to other markets around the U.S.?

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17 Comments on "Walmart using discounts to drive BOPIS grocery biz"


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Keith Anderson
Guest
6 years 2 months ago

I believe waving shipping fees to incentivize BOPIS is key.

It’s been the case for a few years now that more than 50 percent of Walmart.com sales are picked up in-store. (As I recall, this was true even with the original Site-to-Store program that preceded Pick-Up Today.)

I still encounter some people who argue that stopping by the store is more convenient than having a product delivered directly to your doorstep—but the bigger factor in my view is that Walmart offers in-store pick-up for free.

This is one more variable in the price-value equation, and the competitive landscape will have to react—just as Target has recently used lower hurdles for free shipping as an advantage and loyalty play.

Paula Rosenblum
Guest
6 years 2 months ago

Here’s the thing. There has never been a question that BOPIS (official worst acronym ever, by the way) had a market. Whether via click-and-collect or click-and-have-it-delivered, the customers are there.

What hasn’t been there is a profit model. With very few exceptions, it has proven incredibly hard to make money doing the “pick” for customers.

So I just see this as a loss leader ploy, and the company will likely recognize at some point that the problem is not driving demand, it’s making money.

Christina Ellwood
Guest
Christina Ellwood
6 years 2 months ago

Price incentives are one way to entice shoppers to try buy online pickup in-store (BOPIS). Changing consumer behavior, whether it’s with a new payment system or a new shopping approach, is always a challenge, and incentives, personal demonstrations and video/ad demos are tried and true methods. A mix is required along with ample time between exposures. Click-and-collect, as BOPIS is known in many other countries, is very popular so it’s likely the resistance to change can be overcome here, too.

Dr. Stephen Needel
Guest
6 years 2 months ago

Price is critical, period. Walmart’s involvement will only matter if they can truly make it convenient and less expensive than anything else. Yes, I would expect expansion.

Max Goldberg
Guest
6 years 2 months ago

With so many retailers offering groceries, price remains a big factor affecting consumer choice. By offering coupons with significant value to try BOPIS, Walmart is driving sampling. If consumers sample and like the quality of the process and the groceries, they will be likely to become repeat customers. I’m sure Walmart is tracking these test markets closely. If they feel BOPIS is working, look for them to roll it out to other markets and look for them to gain market share.

Graeme McVie
Guest
Graeme McVie
6 years 2 months ago
Online ordering is going to continue to be an important component to the overall value proposition offered by grocers. It will be more important to some customers than others and for those customers it will be an important service offering. There’s a big difference between online ordering for products like TVs, where the price of the item is of paramount importance and consumers perceive the item price as a key component of the value proposition, and online ordering for grocery products. For grocery ordering there’s a significant convenience component to the online value proposition that retailers should clearly communicate: The customer can order their goods online from the comfort of their home at whatever time of day is convenient, the customer doesn’t have to walk around the store to fill the cart, the customer doesn’t have to unload the groceries from the cart at the register and the customer doesn’t have to bag all the groceries. For some customers, going to the store will remain a core part of their grocery shopping process but for… Read more »
Joel Rubinson
Guest
6 years 2 months ago

To encourage shoppers to break their habits and engage in new shopping behaviors, I think an incentive like this makes sense. It is similar to the incentive Peapod offers.

Adrian Weidmann
Guest
6 years 2 months ago

BOPIS will continue to emerge as the “new” retail. Walmart is using the discount and price incentive to change the status quo behavior of shoppers. The obstacle is familiarity and trust. Once shoppers understand how the process works and realize the ease and convenience their behavior will change. BOPIS will become the new normal in retailing in a host of verticals, from QSR to DIY. The ability to generate revenue from small square footage and reduced labor costs will continue to drive this trend. Once digitally empowered shoppers become familiar with and trust the process, it is up to the retailer to make certain the experience is seamless and customers actually get what they ordered and paid for!

Herb Sorensen, Ph.D.
Guest
6 years 2 months ago
Given the data, attributing everything to “price” is almost certainly erroneous—and VERY COSTLY. Not reviewing everything here, but simply pointing out that our own research has confirmed Glen Terbeek’s long ago finding. Marking down the price on a PROMOTIONAL display was unnoticed by half the people actually purchasing the product, and the other half who purchased didn’t care about the markdown. Further, at least one major retailer is regularly putting things on end caps without marking down the prices, and is getting good results. They intend to continue even though a few shoppers have loudly complained. IT IS THE LOCATION AND FOCUS ON THE OFFER that creates the sale, NOT the marked down price. This doesn’t mean that a low-price image is not good for a store. But for most retailers that is achieved through high-low pricing, in what I call a “casino store.” Shoppers love that sometimes they win and sometimes they get really great deals. Buying their interest (and sales) with cut prices is costly and can be counterproductive. See: “Mind Your Pricing… Read more »
vic gallese
Guest
6 years 2 months ago

Are you teasing us? Price is critical to their business model! Maybe to attract more upper-end customers in cities like SF and NYC the service is most important, but in the cities where they are testing, price will be the key to drive business to them. Haven’t we tried this before and found that it is only a good business model in those more densely populated areas?

Fred Blanton
Guest
6 years 2 months ago
  1. Very important and especially if delivery becomes a factor as Amazon may take a bite.
  2. Walmart can change the landscape of BOPIS…only if they make it attractive and utilize algorithms and predictive shopping list and have buyers create a desired profile.
  3. I fully expect expansion to nearly every store…they will have to as Amazon will drive them to it or out of business.
Jackie Kuehl
Guest
6 years 2 months ago

Price is everything at generating trial and usage. How they can sustain the model with cost of distribution and executing orders is the real question.

James Tenser
Guest
6 years 2 months ago

It’s a no-brainer to allocate a small portion of a vast Walmart supercenter parking lot to an order pickup station. The astonishing success of Carrefour and Auchan’s click-and-collect concepts in France is a potential game-changer that Walmart might want to emulate.

For me, Walmart’s discount incentive is a short-term tactic designed to earn customer trial of the service during pilot. But the convenience factor, such as the ability to pick up a routine order on the way home from work in just a few minutes, will win loyalists if it is well executed.

I hope we move away from calling this concept by the very functional acronym “BOPIS” and start substituting some consumer branding. Auchan calls its click-and-collect service “Drive,” for example.

Bill Davis
Guest
6 years 2 months ago

While lower prices are usually attractive, upping the incentive from $5 to $10 makes me think Walmart isn’t seeing the traction it would like to see. And in the initial trial of BOPIS for groceries, quality of the service is just as important, if not more, than the discount because if the fruits, vegetables, meats, etc. aren’t of high quality, shoppers are unlikely to become repeat purchasers.

Ken Lonyai
Guest
6 years 2 months ago

Paula is right about the BOPIS acronym… 😉

The only significant change to the grocery shopping experience for any shopper living today, is the advent of some (feeblish) grocery shopping app. So to change shopper habits and open their thinking to BOPIS, I believe Walmart is on the right track. For the majority of shoppers it will take incentive—a lot of incentive—to get them regularly shopping for CPG items and groceries online, especially for local pick-up, which is more effort for the consumer than home delivery.

My guess is this will be a slow (multi-year) consumer training exercise and it will take many other brands in addition to Walmart to re-educate shopper traits.

Herb Sorensen, Ph.D.
Guest
6 years 2 months ago
There is another HUGE factor I have not yet seen exploited effectively. BOPIS is Buy Online-Pickup IN-STORE!!! This is the perfect opportunity for add-on sales, but you shouldn’t just hope that it happens. Everything on the pickup scene should be built with a smooth transition to grab and go extras. BOPIS is a massive opportunity to build in-store traffic, but not just to coax the shopper into your current merchant-warehouseman establishment. You can divide your merchandise up in a lot of different ways, but functionally for the shopper there are only TWO kinds of purchases (with a bit of logical lumping): Surprise/Delight/Now and Routine/Autopilot/Angst. The NOW factor, immediacy, already drives 50% of the traffic to the store, and most retailers unjustifiably imagine they are good at Surprise/Delight. The NOW factor guarantees the survival of bricks-and-mortar retail—but not out of massive, Parked Capital stores. “As long as shoppers live in bricks-and-mortar houses, they WILL be shopping in bricks-and-mortar stores!” (But those stores will be only faint reflections of the current store.) So, not only does NOW favor… Read more »
Peter J. Charness
Guest
6 years 2 months ago

BOPIS vs. CLAC is the real issue…the interesting point here just to throw in another acronym is EDLP which is the hallmark of Walmart is somewhat being pushed aside by what is effectively a promotional strategy to get people to come to the store and take home product. If it’s an incentive to try it once, sure…followed by maybe Tuesday is ClAC is on sale day. It’s a bit of a slippery slope.

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