On Walmart.com, a Lego City Great Vehicles ferry set was discounted to $23.83 from an original price of $29.99, and you can get it shipped to you for free in two days. But if you should choose to pick up that item inside a Walmart store, you get to take off another $2.55 through Walmart’s new Pickup Discount program. That means the total price you would pay: $21.28, the very same discounted price Amazon.com charges for the product.
The Pickup Discount feature is just one of a wave of aggressive moves Walmart has made in its battle with Amazon, and the use of its physical stores as an asset is a key to the way the battle will play out.
Walmart says its stores are within 10 miles of about 90% of the US population. That means those brick-and-mortar locations could help Walmart reduce costly last-mile delivery expenses and serve as online distribution and fulfillment centers of their own.
“The war is on,” said Cowen & Co. analyst Oliver Chen. Walmart “will continue to need to use its physical assets as a competitive advantage.”
The fight is going to get more intense. More than four-fifths of Walmart's shoppers also visited Amazon in the second quarter, Chen said, citing a Cowen consumer survey. Walmart shopper overlap with Amazon has increased for 10 straight quarters, he said.
The Bentonville, Ark.-based company’s namesake US division on Thursday reported a 1.8% Q2 comparable sales gain, including a 0.7 percentage point contribution from ecommerce sales, which jumped 60%. Despite such ecommerce acquisitions as Jet.com and ModCloth.com, Walmart said organic growth was the biggest sales driver.
One driver of ecommerce growth is Walmart’s online marketplace of third-party sellers, which it has expanded dramatically. The number of units Walmart.com sells online has jumped more than 30% since Q1 to more than 67 million. Gross merchandise value sold via Walmart US ecommerce segment surged 67%.
Another driver is groceries. Walmart President and CEO Doug McMillon said Walmart US also has seen “strong results” from its online grocery pickup feature, which the company has expanded to more than 900 US locations and allows shoppers to pick up their grocery orders curbside. That could further boost sales of the company’s grocery sales, Walmart US’s largest segment. The company said US grocery comparable sales rose in the low-single-digits, the category’s best performance in five years.