Two things are going on at Wal-Mart Stores Inc. (NYSE:WMTD) at the same time – both designed to increase profits. On the one hand the company is cutting costs by eliminating hundreds of corporate jobs including at its warehouse store Sam’s Club operations.
In addition, the Bentonville, Arkansas, chain will introduce discounts to customers who opt to place orders online and pick them up in a Wal-Mart store instead of having them delivered to the customer’s home. Wal-Mart says the shipping cost savings will be passed on to the customer.
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Job Cuts Continue
The most recently announced layoffs at Wal-Mart are not the only ones the company has initiated in its efforts to compete with Amazon.com Inc. (NASDAQ:AMZNC). Earlier this year the company cut almost 1,000 corporate jobs, including 200 in its e-commerce department.
In fact, since 2016 Wal-Mart has cut more than 18,000 U.S. jobs by closing stores, reducing staff and layoffs at corporate HQ. According to a company spokesman, about 11,000 of those employees found alternate jobs within the company.
More Digital Fewer Stores
On Wal-Mart’s investor day the retailer said it would invest more dollars into digital and less into physical store expansion. This does not mean there will not be new stores. In fact, the company plans to hire 10,000 workers for new store openings alone, according to a company spokesman.
If the company’s plan to divert online sales deliveries to stores instead of homes works as planned, stores could see even more customers in the future as people place orders from home but venture to a nearby Wal-Mart store to pick up their merchandise.
Luring Customers To Stores
Wal-Mart’s rollout of the “order online – ship to store” plan will take place within a month and expand over time. Discounts will be available on items sold only online and will initially include about 10,000 products that are expensive to ship to homes – such as bulky car seats. The number of products available could be as high as a million by June, the company said.
The system the company will use resembles the “smart basket” feature found on Jet.com Inc., an online retailer Wal-Mart bought last year for $3.3 billion. The smart basket allows consumers to choose from a variety of options that lower the price – such as forgoing returns, paying with a debit card and ship to store.
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A New Transparency
Behind the new Wal-Mart feature, called “Pickup Discount” is a new type of transparency by which Wal-Mart shows consumers where the costs are in an online purchase and how they can save money by, for example, picking up the product in a store instead of having it shipped to their home.
The main goal of the new feature is to leverage Wal-Mart’s existing delivery network of more than 6,700 trucks and pass the savings on to customers. A secondary benefit, of course, would be bringing online prices down, aiding the company in its battle with Amazon. Since there is a Wal-Mart store within 10 miles of 90 percent of the U.S. population, store pickup isn’t a huge inconvenience to shoppers.