Taking another page from the Jet.com business it bought last year, Walmart will first cut prices on about 10,000 Web-only items such as Britax car seats and Lego toys, according to a statement. The program, which starts on April 19, will expand to more than a million so-called “long tail” items by the end of June, the company said.
The effort builds on Jet’s Smart Card business model, which provides discounts to customers who package items together or forgo returns.
“We are beginning to take the ethos behind Jet’s Smart Cart and marrying it with Wal-Mart’s operational efficiency,” Marc Lore, head of Walmart’s e-commerce business, said in the statement. “Quite simply, it costs less for us to ship to stores. So, our customers should share in those savings.”
The move is Lore’s latest step to check Amazon’s growing online dominance and shows how he’s keen to meld Jet’s innovations with Walmart’s 4,700-store network. Earlier this year, Walmart scrapped a free-shipping program that competed with Amazon’s Prime membership and replaced it with free two-day deliveries for orders of at least $35. Amazon will control half of the US e-commerce market by 2021, according to analysts at Needham & Co. They estimate that the online giant currently commands 34 percent, compared with Walmart’s less than 5 percent.
“Walmart is trying to move quickly and is stepping up its game,” Robin Sherk, an e-commerce analyst at Kantar Retail, said by phone. “The idea of passing cost savings onto the shopper is something that could be quite disruptive.”
The discounts vary by item and reflect the savings to Walmart for shipping the orders to its stores on one of its 6,700 trucks, rather than to a customer’s house. The $148.05 Britax B-Safe 35 infant car seat is reduced by 5 percent to $140.65, while the Lego City Great Vehicles Ferry is discounted 11 percent to $21.44. Other products in the program are Coleman coolers and Vizio televisions. Lore called the program a “game-changer” and said the level of discounts could be adjusted going forward.
“Part of the reason why we are launching 10,000 products to start and growing it over time is that we want to perfect that discount,” he said.
Walmart’s Web investments — which also include acquisitions of sites Moosejaw and ModCloth, a new network of e-commerce distribution centers, and an expansion of online grocery — have prompted belt-tightening elsewhere. The company has reduced jobs at both its West Coast technology hub and at its headquarters in Bentonville, Ark.
Chief financial officer Brett Biggs said at an investor conference last month that the company needs to “rejuvenate” the famed low-cost culture that patriarch Sam Walton instilled.
The term “long-tail” refers to the seemingly endless assortment of products that online retailers can offer, compared with the shelf-space constraints that force physical retailers to focus on a more limited assortment of top-selling items.