Walmart has started charging higher prices online than in-store in an effort to save on shipping costs and push shoppers to brick-and-mortar locations, The Wall Street Journal reports.
Some products on Walmart.com now list an “online” and “in-store” price to let consumers know the difference. Products ranging from macaroni & cheese to toothbrushes have diverging prices, though many products remain unaffected.
The company is experimenting with a new system that's raising the prices of items that would otherwise be unprofitable to ship, sources told WSJ. Walmart appears to be trying to make its online operations more profitable — it's also reportedly asked its merchants to sell more of their products in bulk, which would make orders more expensive and more profitable to ship. Shipping can be extremely costly, even Amazon with its impressive logistics network struggles with high shipping prices, so it's no surprise that Walmart is wrestling with similar issues.
Walmart is trying to encourage customers to visit its physical locations with these higher online prices. The retail giant previously started offering pickup discounts to entice customers to go to stores to collect their orders once they arrive, helping Walmart avoid costly last-mile delivery expenses. These new online price differences are part of the same strategy, as they incentivize in-store shopping with lower prices, this time cutting out shipping entirely. Walmart’s greatest advantage in e-commerce is its brick-and-mortar network, and getting more consumers into its stores allows it to leverage that strength.
However, having higher online prices may prove problematic for Walmart, particularly as it looks to push its omnichannel offerings. While Walmart’s aim to make online transactions more profitable makes sense, consumers will probably be unhappy that they’re not getting the lowest prices possible online. The price differences could scare e-commerce customers away from Walmart, especially given how this may appear to betray Walmart’s low-price reputation. In particular, this move could negatively impact the company’s omnichannel operations, which are critical in its fight to leverage its brick-and-mortar network against Amazon, by reducing customers’ desire to shop across channels.
Jonathan Camhi, research analyst for BI Intelligence, Business Insider's premium research service, has laid out the case for why retailers must transition to an omnichannel fulfillment model, and the challenges complicating that transition for most companies. This omnichannel fulfillment report also detail the benefits and difficulties involved with specific omnichannel fulfillment services like click-and-collect, ship-to-store, and ship-from-store, providing examples of retailers that have experienced success and struggles with these methods. Lastly, it walks through the steps retailers need to take to optimize omnichannel fulfillment for lower costs and faster delivery times.
Here are some of the key takeaways from the report:
- Brick-and-mortar retailers must cut delivery times and costs to meet online shoppers’ expectations of free and fast shipping.
- Omnichannel fulfillment services can help retailers achieve that goal while also keeping their stores relevant.
- However, few retailers have mastered these services, which has led to increasing shipping costs eating into their profit margins.
- In order to optimize costs and realize the full benefits of these omnichannel services, retailers must undertake costly and time-consuming transformations of their logistics, inventory, and store systems and operations.
In full, the report:
In full, the report:
- Details the benefits of omnichannel services like click-and-collect and ship-from-store, including lowering delivery times and costs, and driving in-store traffic and sales.
- Provides examples of the successes and struggles various retailers have experienced with omnichannel delivery.
- Explains why retailers are having trouble managing costs with their omnichannel fulfillment efforts, which are eating into their profits.
- Lays out what steps retailers need to take to optimize costs for their omnichannel operations by placing inventory where it best meets customer demand.
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Source : http://www.businessinsider.com/walmart-is-charging-different-prices-online-and-in-store-2017-11