One of the longtime problems that Walmart has had with its many e-commerce efforts is that the retailer has a very healthy heritage of being physical-store-centric, and that perspective colors the thinking of many Walmart executives.
True merged-channel thinking is entirely channel-agnostic. Put simply, the store has no preference whether a shopper buys from a traditional website, a mobile device, a physical store or a call center. In the same way that a store manager doesn't care whether a shopper enters the store from the north entrance or the west entrance — as long as they enter and buy stuff — retailers shouldn't care how a customer comes to them. But decades of seeing themselves as a physical store isn't deleted overnight.
Let's take a look at comments made during Walmart's analyst call on Thursday (Feb. 18). Much of the call was specifically designed to show that Walmart now sees itself as a merged channel — but its execs' phrasing betrays old-school thinking.
Consider the comments of Walmart's chief e-commerce exec, Neil Ashe: "Customers could also get their online orders the same day in stores, and we saw nearly a 40% jump in store pickup during holidays. We were also able to blend our online and stores to serve customers how and where they were shopping. One great example was on the morning of Black Friday, when we saw a smart TV sell out online within 20 minutes. We had another TV from that supplier available in stores, so we dialed up the promotion on Walmart.com and made it available for store pickup. The item quickly sold out in stores. To customers, it was a seamless access to a gift they wanted. It was a great example of the power of combining online with stores in close proximity to customers."
At a glance, it sounds very merged channel, no? But let's look closely. "Customers could also get their online orders the same day in stores, and we saw nearly a 40% jump in store pickup during holidays." Amazon is also able to deliver same-day— in select markets, for select products — but it delivers to customers' homes. Walmart's approach is to deliver in-store, where shoppers have to deal with holiday parking, fight the crowds and be exposed to lots of upsell opportunities.
It's absolutely merged-channel-like, if your idea of merged channel is to use all of the channels to send people to physical stores.
What about that Black Friday TV? Walmart.com has a special on TVs and sells out. So far, so good. It had a similar TV in stores, from the same supplier. Why not take that inventory and place it where it's been selling out, online? Walmart's option instead is to again send people to the stores. "We dialed up the promotion on Walmart.com and made it available for store pickup." Wouldn't home delivery — especially for a large, awkward item like a TV — be preferable?
The counter: In-store saves everyone the delivery charges. The counter to the counter: Offer shoppers the option. Many would rather avoid physical stores, especially at a time of year when the traffic is hectic and roads and parking lots are sometimes-snow-covered. Walmart doesn't think that way.
"To customers, it was a seamless access to a gift they wanted." Seamless? Going to a Walmart on Black Friday is anything but seamless. "It was a great example of the power of combining online with stores in close proximity to customers." If you're delivering, the "close proximity" doesn't matter.
Here's another comment from Ashe: "Customers were also using our app to shop seamlessly across online and stores. We offered early access to the Black Friday circular on the mobile app for the first time, and the app jumped to the number one spot in the Apple App Store that day."
That first sentence — with talk of shopping seamlessly across online and stores — was a good beginning. But what is the example that Ashe offers to support this seamlessness? Access to the Black Friday circular, which is a list of physical-store-only sales. Walmart loves the mobile, as long as it's mostly driving shoppers into the physical store.
The most interesting innovation that Ashe and others touted was Walmart's drive-through grocery effort. "We've rolled out to those additional markets and we're continuing to see the strong emotional response it triggers with customers and the very personal relationship they're forming with Walmart. Customers are literally jumping out of their cars to rave about it. And one of my recent favorites was a mom with two kids in the back of her car. She told us about how much easier it has made her life because she can shop where and when it's convenient and then drive up and just get her groceries. She placed her order while she was relaxing and watching her kids play."
The drive-through grocery is a truly good innovation. But guess what. It's all about getting shoppers into those physical stores. See what I mean about Walmart being store-centric?
Look, I honestly do get it. If had 4,177 physical stores that I had to pay for, I would try t leverage them every which way I could, too. But that is not what merged channel is all about. It's supposed to be customer-centric, making shopping via any channel as easy as possible.
I'm reminded of that classic business cliché, that to a person with a hammer, every problem looks like a nail. To a Walmart exec, the answer to every problem is to send shoppers to a physical store. That really shouldn't be your default answer — unless you're presenting to the Walmart board.
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