Walmart Looks to Differentiate Through New Online Pricing Strategy
BIRMINGHAM, AL - Can a new pricing strategy help Walmart differentiate itself from one of its biggest competitors? According to The Wall Street Journal, the retailer’s new move to raise online prices is effectively showing key differences between Walmart and e-commerce mega company Amazon.
Walmart’s new strategy entails a notable increase in price for items purchased online, hoping the result will be to drive more in-store traffic, the source reports, citing unnamed people familiar with the matter. Avery Sheffield, Brandywine Global Portfolio Manager, told CNBC that the strategy could help the retailer stop losing money on sales that weren't profitable in the first place.
“We always work to offer the best price online relative to other sites,” a Walmart spokeswoman commented to WSJ. “It simply costs less to sell some items in stores. Customers can access those store prices online when they choose to pick up the item in store.”
When shopping online, Walmart displays both in-store and online prices for some of its items, giving customers the option to shop online and pick up in-store with the less expensive price instead of getting the item delivered. Sheffield noted that this “online sticker shock” could work to actually help incentivize visiting Walmart's physical locations when customers do go into stores and see how much cheaper prices are.
"I think Amazon will continue to take market share because they are kind of playing by their own rules and I think that digital will continue to take market share from stores,” Pro4ma Founder and CEO Liz Dunn told CNBC on Closing Bell noting that Amazon is now focused on topline growth, whole Walmart still needs to make a profit. “Amazon will get an outsize portion of that share.”
Will this translate into a new avenue for profit for Walmart in the face of steeper-than-ever retail competition? AndNowUKnow will keep you in the loop.