Walmart chasing online sales with storage lockers for easy pickup
Walmart Canada is expanding its “grab and go” locker pickup system for online orders just in time for Christmas, beating Amazon Canada to the punch.
Walmart began testing a locker system for web customers at 10 Toronto-area stores in August, offering it as an alternative to home delivery. It allows customers to pick up the goods at a locked unit with a personal PIN code tied to their order, thereby skipping cash register lines and in-store shopping time.
On the strength of the early pilot, Walmart is now expanding the project to 33 other Toronto-area stores between now and Dec. 5, before targeting a gradual rollout to other Canadian markets over the next 18 months.
“Certain stores and areas will use the service more frequently and more often, so that is how we are planning our rollout,” said Gino DiGioacchino, executive vicepresident of e-commerce and chief of operations at Walmart Canada.
The strategy comes as the country’s biggest mass merchant looks to limit competition from the likes of Amazon, which has been siphoning sales from a wide swath of retailers in categories such as dry groceries, electronics, toys, and cosmetics.
Amazon has a similar locker setup, Amazon Locker, in certain markets in the United States and U.K., but it has not yet brought the program to Canada.
Amazon.ca did step up its delivery capability in Canada this month, though, with an offer of same-day delivery service in Vancouver and Toronto for orders placed before noon, charging a fee of $6.99 and up.
That came after Walmart began same-day shipping in the Toronto area in September, but it charges no fees for the service.
“Here is what is interesting — you would think that everyone would want (their online orders) delivered to home,” said DiGioacchino on the appeal of the pickup lockers.
“But our customers are constantly in motion. Our customers are families. They are going to work, they are constantly moving the kids, they are taking them to sporting activities after school.”
Missing a home delivery from an online order usually means the absent homeowner receives a no- tice that the merchandise will be available the following day from a local pickup location such as a Canada Post outlet — requiring a wait of a day, another errand and possibly a drive. Customers are not always home to receive deliveries, and five per cent to seven per cent of Walmart.ca’s online transactions already request to pick the goods up at the closest Canada Post location.
“From a strategic point of view, the ideal way to leverage any bricks-and-mortar business with an online channel is to take advantage of all your points of distribu-
We do have busy stores around Christmas, and this another service that we can provide our customers.
tion,” said George Minakakis, CEO at Toronto-based consultancy Inception Retail Group Inc.
“And if you are first to market with something, it gives you a significant advantage over your competitors. Leveraging your (storefront) as a point of distribution for online sales is going to be the new wave in Canada, and it has to be, from a cost point of view. The cost of actually being able to ship across Canada (from warehouses) is very expensive.”
Walmart, Canadian Tire and Loblaw are all at varying stages of testing their so-called “omni-channel” strategies, offering customers multiple avenues of commerce be- yond their physical locations.
Canadian Tire has had early success with its non-delivery model for online shoppers. While people can arrange the shipment of large goods like barbecues from stores, the bulk of the business is done through in-store pickup of online orders.
Loblaw recently started a pilot of its own “click and collect” program on groceries at three Toronto stores, allowing customers to shop online and later pick them up for a fee of $3 to $5.
The established Canadian players are moving in this direction in response to each other and to Amazon, by far the largest web retailer in Canada.
A recent report from BMO Capital Markets estimated Amazon accounted for as much as 7 per cent of Canada’s $21.6 billion in e-commerce sales last year, when it introduced 14 new merchandise categories to the market. That was far ahead of the next largest players, Costco.ca (1.6 per cent) and Walmart.ca (1.5 per cent).
Walmart has responded by stepping up its e-commerce spending and digital initiatives. It doubled its online assortment again this year after doubling it in 2013, and launched free shipping throughout most of Canada.
DiGioacchino said the initiatives have thus far been positive for the business.
“In no way have we found this cannibalizing our store sales — it has been accretive to our store sales. We do have busy stores around Christmas, and this another service that we can provide our customers.”
In the future, Walmart would also consider putting such lockers in locations other than its 400 Canadian stores, once that system is rolled out to executives’ satisfaction.