Walmart undermines its online strategy — again

When you watch Walmart, as I have done for years, you start to wonder where it wants to go with its business model, and whether it has any chance of ever getting there

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When you watch Walmart, you start to wonder where it wants to go with its business model, and whether it has any chance of ever getting there. Two moves that the giant retailer made this week powerfully illustrate this. One move is future-facing and at least somewhat bold, while the other seems aimed at protecting the existing bricks-and-mortar business model even as the chain makes a feint toward online.

First, the half-hearted move. Walmart had been signaling that it would make a big change in how it handles online sales ahead of the holiday shopping season, suggesting that it sees online behemoth Amazon as its arch-rival. And yesterday (Oct. 29), Walmart announced that it was radically improving buy-online-pickup-in-store for the holidays. Great news, was my thought; after all, I had recently gone through a suboptimal experience trying to use Walmart's buy-online-pickup-in-store service. But my glee was short-lived. Visions that were dancing in my head (Maybe they are going to ding employee salaries for every item that they forget to bring to the customer service pickup area? Perhaps they are adding a large number of additional staffers to keep the lines flowing smoothly?) were quickly dashed.

Here's the "big news" from the announcement: "Customers can check in using their phone when they arrive to pick up their online order." Which helps what, exactly? My main problem when I used this service was that my item wasn't ready when I arrived.

Oh, there is more: "New Pickup branding in stores will help guide customers more quickly to the Pickup service area." You're kidding, right? Your solution, Walmart, is better signage? Yes, shoppers were often confused about where to go — and this will help — but the actual problems were long lines at the pickup spot (once you found it) and the products not being ready. 

This is why it can seem that internal priorities get in the way when Walmart sets out to fight Amazon. Walmart's online and mobile teams aren't ever given free rein. Sure, they can dream up great products and services for generating the most revenue and profits for online sales. But, it seems, they absolutely are not allowed to do anything that would truly threaten in-store revenue and profits. Result: Those services never go nearly far enough. Walmart's top bean-counters never forget on which side their bread is buttered.

With that reality, buy-online-pickup-in-store made a lot of sense for Walmart. It makes the sale online, but it then finishes the transaction in a brick-and-mortar outlet, where the customer just might pick up a few more items before leaving. That takes advantage of all those locations staffed with personable, customer-facing employees, something that a sterile digital retailer can't match.

Problem: The advantage disappears when shoppers find the experience of going to the actual store unpleasant. More and more, that seems to be the case for Walmart and it's even worse during the holiday shopping season, when crowded parking lots become even more unbearable, long checkout lines lengthen, and not-overly-knowledgeable sales associates are supplemented by even less knowledgeable temporary workers.

Given all that, my take is that Walmart's buy-online-pickup-in-store strategy will appeal mostly to people who need to go to a Walmart store anyway. But the way it's been implemented doesn't really help those shoppers. If they're going to Walmart to buy milk, they have to stand in a special line to get the item that was ordered online, then go get the milk and wait in a second line. Goodbye, convenience.

The other Walmart announcement this week is for something that's still years away from implementation — and maybe that's why it seems so promising; nothing has been done yet to undermine it. On Monday (Oct. 26), Reuters reported that Walmart has asked the FAA for permission to start seriously testing delivery drones. The chain said it wants to use the drones for "deliveries to customers at Walmart facilities, as well as to consumer homes." According to Reuters, "Walmart also said it wants to test home delivery in small residential neighborhoods after obtaining permission from those living in the flight path. The test would see if a drone could be deployed from a truck to safely deliver a package at a home and then return safely to the same."

This could be a concrete sign that Walmart has figured out that it must quickly move into a post-store reality. By pushing all kinds of delivery — and especially the one-hour deliveries made possible by drones — it is addressing the drawbacks of its physical locations. No more crowded parking lots, lengthy slow-moving checkout lines and apathetic employees. It would simply connect the kind of low-cost products that Walmart's volume can enable with the shoppers who want them.

Poor Walmart, though. Even if drone delivery doesn't get corrupted by the bean-counters, it's still a few steps behind the online competition. Amazon recently filed a patent application for a way to use drones to use mobile geolocation and to deliver products to wherever the shopper is at that moment. From the application: "The user may place an order for an item while at home, select to have the item delivered to their current location (delivery within 30 minutes of the order) and then leave to go to their friend's house, which is three blocks away from their home. As the ordered item is retrieved from inventory, the current location of the user's mobile device may be determined and the delivery location correspondingly updated. As such, the ordered item will be delivered to the user while the user is at their friend's house, or any other location." And then there's this example: "The user has provided information that can be used to determine the current location of the user's boat. The location of the user's boat may be determined based on the GPS of the boat and retrieving GPS data from the boat."

Yes, that means that Gilligan could have ordered five cartons of batteries and radios in the middle of his three-hour tour and had the aerial delivery arrive long before the weather started getting rough.

In a world where retailer devices go out and find the shoppers, a physical retail chain can come to seem more like a ball and chain. From where I stand, it looks like some people at Walmart have realized this, but others will fight it all the way. 

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