Commentary

Walmart's Bringing It Home In San Jose Test

Walmart announced over the weekend that it is testing a home delivery service for groceries in San Jose, Calif., not far from its Walmart.com digital headquarters in Brisbane. Financial Times' Barney Jopson and Alan Rappeport report  that Walmart began a limited test on Saturday"as it looks to online commerce to offset the mediocre growth performance of its bricks-and-mortar stores in the U.S."

Bloomberg's Matthew Boyle actually got wind of the experiment at the beginning of the month but a Walmart spokesman refused to confirm or deny it at the time.  Boyle reported that the service had been dubbed "Project Titan" and that Richard Ramsden, who ran home shopping for the retailer's Asda division in the U.K., had arrived at Walmart.com headquarters.

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Boyle's story runs down some other online grocery delivery services starting with Webvan Group, which became something of a symbol for the dotcom bust of a decade ago, to more successful operations such as Peapod and Safeway.com. While many consumers are wary of buying perishable products online, those who do spend more than other Internet shoppers, Forrester analyst Sucharita Mulpuru tells Boyle. According to Forrester, online retail sales grew 13% in 2010 to $176 billion, and Forrester predicts they will climb to $279 billion by 2015. Online grocery sales' slice of the pie is about $10 billion.

The FT's Jopson and Rappeport point out that Amazon is testing a similar service, AmazonFresh, in its home city of Seattle and that another home-delivery company, FreshDirect, says it is profitable -- with year-on-year sales growth of 20%.

Walmart To Go customers can order groceries, fresh produce, meat seafood, baked goods, over-the-counter drugs, household supplies and health and beauty products, Tracy Seipel reports in the San Jose Mercury News.  A minimum order of $49 is required. Prices are the same as in the store.

Walmart delivers the goods the next day at whatever time the customers choose, within a one-, two- or four-hour window, for a fee of $5 to $10, depending on the urgency. No tipping.

"Our focus at this point is listening and learning from our customers," says Walmart.com spokesman Ravi Jariwala. Many customers have been checking Walmart's online site to see if the products they want are in stock before they head out to the stores, he says, and over time they began asking about delivery.

Orders can be placed up to three weeks in advance. "Three weeks?" asks Seipel. "We have a couple of kids at home, and one is still in diapers," Jariwala responds. "It's very convenient for us to know that if we need another batch of diapers in two weeks' time, it will be there."

Craig Johnson, president of consulting firm Customer Growth Partners, tellsTheNew York Times'  Stephanie Clifford that "the move made some sense" because shoppers go to Walmart's big-box stores "for large stock-up trips, not for on-the-go grocery shopping, and the delivery could help address that issue."

Ellen Byron, meanwhile, has a piece in TheWall Street Journal this morning detailing how various retailers are tweaking their online strategies to influence consumers who use the Internet to plot their forays into bricks-and-mortarland. Three years ago, 10% of Saatchi & Saatchi X's in-store marketing projects included an online component, according to Dina Howell, CEO of the in-store marketing unit of Publicis Groupe. Now "almost 100% do," she says, and 20% of the shop's revenues come from digital projects.

One of the merchants Byron cites is Walmart, which has made its online circulars more user-friendly and customized to a shopper's interests or needs. "If you don't have a pet, your circular won't need to include pet stuff," CMO Stephen Quinn points out. The retailer has also broadened its use of Facebook and other social media sites, he says, stating the obvious: "Over time people will use these [online] tools much in the way they've used media or word of mouth."

Last week, Walmart announced its acquisition of social media company Kosmix, whose technology "searches and analyzes connections in real-time data streams to deliver highly personalized insights to users," according to a press release. The platform powers TweetBeat, a real-time social media filter for live events that had more than 5 million visits last month; Kosmix.com, a site to discover social content by topic; and RightHealth, one of the top three health and medical information sites by global reach, Walmart says.

Yes, but how will it emulate the experience of being greeted by someone in an ill-fitting vest?

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