Brick-and-Mortar Meltdown Gets Costly for Big Retailers, and Results May Vary

Ecommerce and the globalization of retail crush distribution channels, wholesalers, local retailers, large retailers, prices, and margins. 

Transcript of my podcast on Sunday. You can listen to my podcasts on YouTube.

Walmart, Macy’s, Best Buy, Home Depot, Nordstrom, etc. — they all spend vast sums of money building out their ecommerce sites and their fulfillment infrastructure. And the big lump-sum figures are starting to show up in their regulatory filings.

Other major retailers didn’t take the threat of ecommerce seriously, and didn’t have the funds to take it seriously, as they were squeezed by the private-equity firms that owned them, and just put up a website, hoping for the best: Many of them have gone bankrupt. This includes notably, Toys R Us, Sears and Kmart, Bon-Ton Stores, Borders Books, Claire Stores, Sports Authority, Limited Stores, and Payless Shoe Source.

Now the brick-and-mortar survivors are scrambling furiously to get on top of this existential threat that many had blown off for years as irrelevant to their business, thinking that this whole ecommerce thing was overblown, and that ecommerce is only a small part of retail, that it was too small to worry about, etc. etc.

And they’re spending vast sums to get on top it, often belatedly as in Walmart’s case. Some of them are doing it successfully and have become formidable ecommerce competitors, as their own brick-and-mortar business is more or less gradually falling by the wayside.

Ecommerce is not just Amazon. It’s every online retailer out there, including the tiniest mom-and-pop operations. It’s manufacturers selling directly to consumers. In fact, it’s manufactures in India or China selling directly to US consumers as third party-vendors on platforms such as Amazon, Alibaba, eBay, and others. The entire world is trying to sell directly to US consumers, bypassing classic middlemen, wholesalers, distribution channels, importers, and of course, brick-and-mortar retailers.

How much are brick-and-mortar retailers spending in order to catch up with Amazon and others that have gotten ahead of them in the ecommerce game?

For example, Walmart disclosed that at the end of its last fiscal year, it had 33 dedicated ecommerce fulfillment centers around the country. That’s nearly double from a year earlier when it had 17. These are vast modern warehouses where a lot of the work is automated. They’re packed with expensive equipment and technology.

Walmart also disclosed that during the year it had invested $5.2 billion in ecommerce and technology. This includes the new fulfillment centers. That $5.2 billion it spent was up 16% from the prior year. And it compares to only $2.5 billion it spent on store remodels and new stores.

In other words, it’s investing twice as much in its ecommerce business as it is investing in its brick-and-mortar business. And its ecommerce business is still small compared to the thousands of mega-stores it has around the country – and ecommerce is also still small in terms of sales. We’ll get to those sales in a moment.

Walmart also blows billions of dollars on buying ecommerce startups. The most it ever spent on a single startup was $3.3 billion for Jet.com in 2016, a small outfit at the time that had been selling stuff for only about a year.

Last week, Reuters published an investigative report, based on interviews with multiple sources among Jet.com suppliers and consultants advising Walmart on its ecommerce business. And it got some Walmart employees to talk. This report showed how Walmart has been quietly dismantling Jet.com as an entity and absorbing its people into Walmart.com, as sales at Jet.com had been falling and never reached the promised goals.

Walmart came out with a press release, essentially confirming the Reuters report, while putting its own spin on it. But that $3.3 billion it spent on buying Jet.com is gone and won’t come back.

Walmart has been warning that the expenses related to its aggressive expansion into ecommerce are big and getting bigger, and are cutting into is profits.

These billions of dollars spent on acquisitions, and the billions of dollars spent every year separately on building out its ecommerce infrastructure and technology show how serious Walmart has become after blowing off for many years the existential threat that ecommerce poses to its own business.

Walmart’s ecommerce business is already huge, but it’s not nearly huge enough, compared to its other operations. The company started to disclose the dollar figures in its SEC filings in 2018, so we can actually see the dollars involved.

In the last fiscal year, ended January 31, 2019, Walmart’s ecommerce sales in the US soared by about 35% to nearly $16 billion! But that was only 4% of its total US sales.

During the quarter ended April 30, Walmart’s ecommerce sales in the US jumped by 34% year-over-year to $4.3 billion. And the share of its US ecommerce business rose to 5.3% of its total US sales. At the current rate of growth, its ecommerce sales in the US will exceed $20 billion this year.

Walmart went from on online-denier a decade ago to the third largest online retailer in the US in 2019, according to eMarketer estimates, behind only Amazon and eBay. And ahead of number four and five, Apple and Home Depot.

Yes, Homed Depot is a huge online seller! Not too long ago, the online-deniers said that people would never buy home-improvement materials, tools, and home appliances online. But they do, just like they’re now buying shoes on line.

But Walmart is still woefully behind: in Q1, only 5.3% of its US sales came from ecommerce.

Among the other brick-and-mortar retailers that now disclose actual online sales are Best Buy, Nordstrom, and Neiman Marcus. And they’re all ahead of Walmart.

Most brick-and-mortar retailers still only brag about how fast their online sales are growing in percentage terms but don’t disclose online sales in dollars because it would show how terrible their brick-and-mortar stores are doing.

Nordstrom, and Neiman Marcus both get over 30% of their total sales from ecommerce. But sales at their brick and mortar stores are in decline.

Nordstrom’s online sales rose 7% year-over-year in its last quarter, to just over $1 billion, while its brick-and-mortar sales fell 7.5% to $2.3 billion. Nordstrom has a great online business, but its brick-and-mortar business is dying.

Best Buy’s online sales last quarter rose by 14% to $1.3 billion, and accounted for 15% of its total sales. But its brick and mortar sales declined 1.3%.

Macy’s net sales in the quarter fell 0.6% to $5.5 billion, despite what it called “double-digit” growth in ecommerce sales. It still does not disclose actual online sales. But you don’t need to be a genius to figure out, when overall sales decline while digital sales are soaring, just how bad business must be at its ever-shrinking number of brick-and-mortar stores.

For many years, Walmart had decided that it – as America’s largest retailer with thousands of mega-stores around the country – won’t be threatened by ecommerce. Americans like to go to the store, the thinking went. They’d never buy shoes, food, clothing, and toys online.

Walmart’s initial response was to try to kill the “Amazon subsidy” – the quirk in the law that allowed Amazon and other online-only retailers to sell merchandise across the US without collecting sales taxes, while Walmart had to collect sales taxes, including on its online sales, in all states where it had stores, and it has stores everywhere.

So Walmart teamed up with states that needed the sales tax revenues. In 2012, California became the first big state that compelled Amazon to collect sales taxes. In rapid-fire sequence, other states followed. By 2017, Amazon collected sales taxes in all 45 states that have state-wide sales taxes and in Washington DC.

This had been a true competitive disadvantage for Walmart, compared to online-only retailers. But after this disadvantage was removed, online sales didn’t crater. On the contrary, they continued to boom, and some of those sales came out of Walmart’s hide, and its brick-and-mortar sales stalled.

So Walmart started throwing money around – many billions of dollars every year – on acquisitions in the ecommerce space and on investment in its own technologies and infrastructure. For a simple reason: to stay relevant, and to remain the largest retailer in the US. It has been hit-and-miss, as the Jet.com acquisition shows.

But the threat is larger and wider and involves the entire world. Manufacturers in China, India, and other places are selling directly to US consumers, by having set up shop as third-party vendors on platforms such as Amazon, eBay, Alibaba, and many smaller ones – thereby going around US retailers entirely.

For example, in 2017, we bought the best set of cotton sheets we’ve ever bought. We got it online, from the manufacturer in India that was a third-party vendor on Amazon. We paid $79.99 for a four-piece king set, with free shipping. The last time we’d bought sheets before then, we’d bought cotton sheets, also made in India, at Nordstrom Rack, and we’d paid about $250 for the set.

Or the other day, I drove to the nearest surviving sporting goods store to buy some defogger for my swimming goggles. The closest store had already shut down a few years ago. So this store is a good distance away. In the past, the store carried two types of defogger: The one I like, made by a small US company; and the one by a big-name US company that everyone knows that dominates swimming gear. I had tried their defogger but didn’t like it.

But when I got to the store, after fighting San Francisco weekend tourist-rush-hour traffic, I found out they don’t carry my brand anymore. They only carry the big-name defogger. I’d wasted time and gasoline.

Back home, I ordered three bottles online directly from the small manufacturer in the US, off their ecommerce site. It arrived in my mailbox three days later.

This is what retailers have to contend with. Anyone can now sell their merchandise directly online. The competition is everywhere. It’s not just Amazon or Walmart or Macy’s.

Ecommerce and the globalization of retail that ecommerce makes possible have crushed old distribution channels, middlemen, and local retailers by going around them.

They have crushed large retailers in the US, such as Sears, Kmart, Toys R US, Payless Shoes, and Bon-Ton stores.

They have crushed prices and margins because comparison-shopping online is the easiest thing in the world, and consumers can buy from anyone anywhere.

It has opened to door to small manufacturers to sell directly to consumers – via their own sites or as third-party vendors on another platform – if they choose to get smart about this.

This is a historic change in how retail is happening – and it’s just the beginning of it. Classic brick-and-mortar retailers will have to get on top of it in an all-out effort, even the biggest of the biggies Walmart, or they will eventually be counted among the retailers, like Sears, that were obviated by events. You can listen to and subscribe to my weekly podcasts on YouTube.

My couch, jeans, car, PC, sheets, and phone weigh in on globalization and the internet. Read…  My Perspective on the Murk of Official Retail-Sales Inflation, with Some Surprising Illustrations

Enjoy reading WOLF STREET and want to support it? Using ad blockers – I totally get why – but want to support the site? You can donate “beer money.” I appreciate it immensely. Click on the beer mug to find out how:

Would you like to be notified via email when WOLF STREET publishes a new article? Sign up here.

 

  46 comments for “Brick-and-Mortar Meltdown Gets Costly for Big Retailers, and Results May Vary

  1. raxadian
    Jun 19, 2019 at 11:45 pm

    Yeah, online selling is a sponge that sucks everything.

  2. kk
    Jun 20, 2019 at 1:27 am

    What happened to the horses when the Ford model T came along? Oh yes, 99% went for dog food.

    • raxadian
      Jun 20, 2019 at 8:33 am

      That’s an exaggeration, it took years for cars to become popular and horses were still used for a while anyway. Also most horses were used to make glue, horse meat was considered too good to feed dogs. All those cartoons about horses being sent to glue factories had to come from somewhere after all.

      Not to mention that back then circuses still used horses. And rural areas keep using horses for decades.

      Why? Cars got stuck quite easily in mud pits, it took double traction vehicles to fully replace horses.

      And if it was a zone with lots of mountains and or hills, car owners bad then could just curse a storm because their cars were kind of useless there.

      Ford T had the unfortunate tendency to break people arms, that’s why smart people have them the spin using a leg instead of an arm.

      • Gandalf
        Jun 21, 2019 at 2:39 pm

        In radiology, a fracture of the radial styloid process has the old eponym of “chauffeur’s fracture”. This was because if you didn’t let go of the engine crank quickly, the sudden kick of the engine start up would drive the wrist bones into the radial styloid process and fracture it. This happened with all the early cars that had only a hand crank to start the engines

        So smart and wealthy people had their drivers crank up the car engines instead

      • alex in San Jose AKA Digital Detroit
        Jun 21, 2019 at 4:22 pm

        Raxadadian – In the depths of the Depression, 2009-2010, out in Gilroy where I was living, I often saw more horse traffic than car traffic on a bike ride to the next speck-on-the-map town over.

        About the T breaking arms, yes, indeed. H. Ford was a really spry guy, even into his old age, and probably had the strength and reflexes to handle a crank starter just fine. But that crank was a terror for many, and electric cars were almost a stereotype of a thing that little old ladies would drive – the spinster sisters in their “electric” even show up in Ray Bradbury stories.

  3. Mike G
    Jun 20, 2019 at 1:57 am

    Retailers haven’t helped themselves with a million MBA-driven micromanaging and corner-cutting cost-cutting decisions and poorly-trained low-paid crappy service that have degraded the shopping experience.

    • James Mitchell
      Jun 20, 2019 at 6:03 am

      California vanity license plate on BMW: 1MORMBA

    • Jun 20, 2019 at 8:40 am

      Mike G,

      Yes. And it’s a vicious cycle: Sales fall at a brick-and-mortar store, so instead of sending in the merchandisers and the retail experts, the finance gurus at headquarters send in the cost cutters. The cost cutters reduce inventory and staffing, and get rid of more expensive knowledgeable people and replace them with cheaper less knowledgeable people, and they reduce store maintenance and stop all investment in the store via upgrades, etc. Soon, the store looks neglected.

      And for customers, the buying experience gets worse. Frustrated because they can’t find what they’re looking for, as it happened to me with the defogger in the article, and frustrated by the lack of help, and shocked by the appearance of the store, customers go on line to buy what they need. And every time this happens, the store permanently loses another customer.

      And then, because customers are frustrated, sales fall further. And so the finance gurus send in the cost cutters again. This goes through a few cycles until the store is dead. In the end, they close the store, either as part of shedding stores and trying to survive by switching to ecommerce, or in bankruptcy.

      • Dale
        Jun 20, 2019 at 6:11 pm

        Exactly. A year ago I went into a Macy’s for the first time in a decade. I was appalled. It looked like a K-Mart inside, disheveled and cluttered, and the little inventory they had was not properly displayed (e.g., unfolded).

        I understand some malls expect shoppers to pay for parking. Not in a million years, given that experience (in the only mall in the most upscale area of the Phoenix MSA, by the way).

      • Gandalf
        Jun 21, 2019 at 3:20 pm

        Wolf, you left out Target, which has done better than the other retailers recently by going against this inventory and cost cutback trend.
        A few things I used to get at Walmart, diet sodas and my favorite hypoallergenic dishwashing liquid and laundry detergent stopped being available at Walmart, but I found them at Target

  4. Briny
    Jun 20, 2019 at 2:02 am

    I buy all my electronic components and repair parts direct, mostly from China and Taiwan. The shipping might not be very fast, free anyway, but not dealing with middlemen and greater expense (on a VA pension), it’s worth it. The future of informed retail. Which explains the games Amazon is playing with their 3rd party vendors, of late.

    • Ethan in NoVA
      Jun 20, 2019 at 10:29 am

      Same, but I recognize that a lot of the parts are fake. There is a trend in China where they take old recycled ICs, sand them down, re-laser etch the part ID and polish the legs. The markings often carry other brand names.

      Also, the whole epost system is a bad deal that lets China ship us goods cheaper than we can mail each other a letter. It used to cost me $25 to mail an NVRAM device to China (very small package) meanwhile it costs $1 for China to mail me one.

      • alex in San Jose AKA Digital Detroit
        Jun 21, 2019 at 4:25 pm

        Yeah I’m really interested in how this works. I sell stuff on Ebay, and now I’m competing with China. I’ll sell US-made Kings brand BNC connectors and I’m competing with Chinese ones for something like $1.89 with free shipping. How in hell are they doing this?

      • Gandalf
        Jun 21, 2019 at 11:02 pm

        I buy stuff on eBay and AliExpress direct from China also and it’s obvious that China’s postal service is heavily subsidized on the China end by the Chinese government.

        An international mail organization called the UPU had set favorable treaty mail rates with the USA for China way back when it was a 3rd world country. As Chinese exports by direct mail increased to over a billion mailed items per year, the USPS was subsidizing the end deliveries of this mail by well over a hundred million dollars a year. The Trump administration announced it was withdrawing from the mail treaty with China last year in October. But the new terms seem to still be in a state of flux

        Of late, I have noticed prices increasing on this direct stuff from China. Shipping costs also are increasing

        Cheap stuff from China is finally getting more expensive, as predicted, with this trade war

  5. Mad Dog
    Jun 20, 2019 at 7:12 am

    Over the past year I have bought a half dozen items off of mail order catalogs. Nearly all the items were made in China. Nearly all of them were defective and had to be returned. Pure junk.

    I’ve started going to major thrift shops in the DC area. Get stuff at 10% of retail and its better quality.

    • Bet
      Jun 20, 2019 at 9:01 am

      i needed an ironing board, went to JO Anns fabrics wanted to charge me about 100.00 for a completed set ….um no. Went to the local good will
      got one for 7 dollars works great

  6. Gershon
    Jun 20, 2019 at 7:28 am

    If war breaks out in the Persian Gulf, filling the tanks of all those SUVs and full-size pick-ups is going to set back consumers by upwards of $100, at least. That’s going to throw a wrench into the gears of the economy if it goes on for any length of time.

    Got gold?

    • Jun 20, 2019 at 9:10 am

      Gershon,

      It’s not that simple. The amount of OPEC oil the US imports has shrunk to near-nothing. Oil production in the US continues to soar, and net imports have shriveled. Oil in storage is now reaching record levels again for this time of the year. If the price of WTI rises to $70 or $80, there will be a flood of investment in the oil patch in the US, and oil production will accelerate further.

      The current low oil prices, and the reduction in investment in the US oil patch was cited yesterday by Powell as one of the reasons why business investment is low. A high oil price would change that in a New York Minute. A high oil price is very good for the industrial economy in the US, including US-made equipment used in the oil patch, though consumers are having to pay for it.

      But wait… so consumers spend more on gasoline and so switch some of their money to buying gasoline, a mostly American-made product, away from buying foreign-made doodads at Walmart. Consumer spending, which includes gasoline, remains the same, but now consumers are buying more of a US product (gasoline) and less imports (Walmart doodads). Remember, imports are a negative in the GDP formula.

      So maybe a higher oil price – now that the US is one of the top, or the top, oil producer in the world – is just what the doctor ordered? But we might not get given how much production there is in the US.

      • MF
        Jun 20, 2019 at 11:05 am

        This has been fascinating me for years. Lehman is often cited as the spark that ignited the GFC, but oil’s price spike provided the kindling.

        I agree that $80 oil spurs production, and not just in the U.S. Tar sands are super price sensitive as well, and add rail demand when prices rise.

        But e-commerce has changed the calculus for oil demand. A delivery-based economy increases demand elasticity for retail gasoline. I think this is why “trucks” are so hot. Everyone has a non-car-based Plan B, so fuel economy is less important. People can literally stop driving and have everything they need show up at the door. This was not the case 10 years ago. For work, car pooling, biking, and telecommuting are way more practical now than they were 10 years ago.

        My bet is that oil price spikes will be far more gradual going forward. Delivery fleets can sign long-term fuel contracts and have a choice of fuels: nat gas, LPG, gasoline, diesel, electric. The delivery economy puts all fossil fuels (including coal) in competition with each other and renewables for the first time in transportation history.

      • Jun 20, 2019 at 12:20 pm

        Economics 101, it’s all about energy. The notion that lowering interest rates will not depress oil prices seems counterintuitive in the very short term. Oil production in the US since Katrina has done an about face. At one time hedge funds were buying and storing crude. Higher US oil prices would hurt consumers and line the pockets of oil producers, and in an election year that would be anathema. 43’s Treasury Sec had Goldman rejigger their commodity index to drop gasoline prices ahead of the 2006 midterms. Low interest rates will do the same thing today, but there will be an impact to jobs and corporate investment and it is much harder to place oil off balance sheet, than it is debt.

      • sierra7
        Jun 21, 2019 at 10:43 am

        Thx, Mr. Richter for that good overview….sometimes just “reading” the “news” or catching price of oil on Marketwath or wherever may give a distorted picture.

  7. Brant Lee
    Jun 20, 2019 at 8:01 am

    Does anyone here buy shoes from Walmart? Our low price leader is also our low-quality leader, people are discovering while searching online. Walmart is only somewhat competitive on better brand items you find on their website, mostly not stocked in local stores. Bottom line: Walmart can’t compete out of the realm of low-end products with ultra-high markup from China.

  8. Jun 20, 2019 at 8:39 am

    I just completed an online purchase/store pick-up with both Home Depot and Walmart. The experience was troubling and indicative of how far Big Retailers have to go in order to compete with Amazon and even good quality E-bay sellers. In-store pick-up is being touted by Walmart as a competitive advantage and more convenient to Amazon. In reality the in-store pick-up order process took longer (one week plus) for store delivery for both retailers and the actual pick-up a logistical disaster. HD has their online order pick-up area sandwiched with the customer service and returns area and flanked by the cashier lines. Service was non-responsive, driven by paper print-out (you must have paper???) and untrained clerks wandered among shelves hastily set up and surrounded by chain link fence. My Walmart pick-up process was are poorly conceived because the area is in the back of the store, requires paper and is obviously staffed by the employees sent off to the Walmart equivalent of Limbo. In summary the Big Retailers can build all the order fulfillment infrastructure they want -its the “last mile” that counts and this requires a differently conceived in-store process and work force.

    • Anthony Aluknavich
      Jun 20, 2019 at 12:20 pm

      MY Home Depot online purchase of a screened in porch materials kit (pickup full of long and heavy building materials) was lost IN THE STORE for two full days. Boy, that was a great experience!

    • Keith
      Jun 20, 2019 at 5:37 pm

      The other issue with ordering from the big boxes online is that prices are often cheaper in the store. I have especially observed this Lowes, where one purchase was $40 cheaper for the item listed for $200 for an online buy/pick up.

      In a way it makes sense, you pay for the convenience. It also helps allow these retailers to hide their in store prices from other retailers, as I find online is often not the cheapest, especially regarding Amazon. Also, it increases foot traffic and potential impulse buying, which I can be guilty of.

  9. David Hall
    Jun 20, 2019 at 9:12 am

    I read 90% of Americans are within ten miles of a Walmart. Some shoppers are using grocery delivery services. They paid extra for them. Online shipping and handling is not free.

    The pharmacies are competing for market share. Rite Aid has seen better times.

    I used to go to the auto parts store to get windshield wipers. Recently I bought them online. I hated looking through a catalogue for a part number. I used Lowes.com for a specialty plumbing part.

    Looked for a brick and mortar camera store several years ago. Saw most of them went out of business. The hearing aid store went out of business. Its store front is vacant.

    • Marc D.
      Jun 20, 2019 at 10:13 am

      I buy my windshield wipers at Wal-Mart.

  10. yerfej
    Jun 20, 2019 at 10:15 am

    Almost EVERYTHING I order from Amazon comes within two days which means I don’t have to go anywhere near a store that is full of masses of the great unwashed. It is not only convenient but it allows one to bypass driving around looking for something. The ONLY thing that can’t be ordered online is fresh food as that HAS to be inspected.

  11. Marc D.
    Jun 20, 2019 at 10:19 am

    One concern I have about the rise of online shopping is the environmental costs. It seems to me it probably generates a lot more packaging waste than regular shopping, because everything is packed in a box and sent to the buyer. That’s a lot of trees to cut down to make all those boxes. And are people properly recycling all those cardboard boxes that are piling up from all their online shopping? Or do they just throw them away? I try to always recycle, personally.

    • Kent
      Jun 20, 2019 at 10:41 am

      Single-stream recycling messes up a lot of cardboard. The truck comes along, dumps your nicely and properly broken down cardboard into the pit, and then mashes it down with your glass products. The glass shatters and embeds itself into the cardboard. The cardboard is no longer recyclable and gets sent to the landfill or a 3rd world country. In reality, very little of anything actually ever gets recycled.

    • Another Scott
      Jun 20, 2019 at 1:13 pm

      And now more and more cities and states are implementing taxes on people for using bags (even recyclable ones) at stores, but not for cardboard boxes, shipping packages and cushions.

      • Keith
        Jun 20, 2019 at 5:41 pm

        I read somewhere that some people just purchase small trash bags to place their items in. I would also probably do this if they pass this in WA. Quick often I do not plan my shopping when I venture out to town, so when there I try to pick up what I need, often without any of my reusable bags.

    • sierra7
      Jun 21, 2019 at 11:00 am

      Marc D.:
      My concern also. Bought a feather duster recently on Amazon. Couldn’t believe the size of the box it came in. Could have packed 100 dusters in that box!

  12. Escierto
    Jun 20, 2019 at 10:50 am

    I go to Wal-Mart to buy a bottle of Boswellia which they used to have. There is none on the shelf so I go to another better stocked Wal-Mart. It’s not there either. I order it online but not from Wal-Mart. Neither of those Wal-Marts will see me in there any time soon. Maybe never.

    • alex in San Jose AKA Digital Detroit
      Jun 21, 2019 at 4:30 pm

      I lost my last reason to go to CVS when they stopped stocking wooden-stick cotton swabs. I just ordered some on Amazon, from China, and probably better quality because the last box of ’em I bought at CVS were really low quality.

  13. tommy runner
    Jun 20, 2019 at 11:21 am

    the us yacht club and hedge/spec buyers can get it back to 145.
    just what the dr ordered, (unfortunately the insurance co denied it).
    gdp formula..its whats for dinner!

  14. JimGraham
    Jun 20, 2019 at 11:39 am

    A note concerning Walmart and their in-store vs their on-line pricing..

    I have noticed that many items in Walmart’s inventory have a online price that sometimes are MUCH lower % wise than the in-store shelf prices.

    I have started ordering items online that are “in stock” (currently available for pickup). Usually they are pulled and ready for me by the time I get to the store.

    • PW
      Jun 20, 2019 at 12:31 pm

      I have used this tactic another retailer as well.

      I have to assume this is a short-term opportunity. They just increased their costs and lowered their prices, paying a store employee to shop for me at a less-than-sticker price.

      However, as a tactic to gain market share I think it’s a smart move. If you can get people to be habituated to ordering online for pickup, you might actually have a chance of beating Amazon. You can order bulky items without shipping surcharges, get things same-day, and not have to worry about porch thieves.

      • Keith
        Jun 20, 2019 at 5:45 pm

        I can believe that. Amazon is no longer the price leader, but they sure are the convenience leader. If I want to put in the effort to price shop, I can usually find a better deal.

        Interesting that Walmart does that. I have noticed that Lowes online prices are higher, my guess is to generate foot traffic. Costco has delivery in my area, but they are up front about increasing the prices of the items to be higher than in the store to offset “free delivery.” I suspect the retailers will be playing around with this tactic to see what works.

  15. Jun 20, 2019 at 12:32 pm

    The one catalyst here is the open offer to “drop ship” items from overseas. It’s considered fairly innocuous that the standard provider (USPS) keeps good oversight (no wine boxes?) while the corporate shippers do not. If you want to send your cousin in a red state some good CA ganja use them. This rollback in open shipping policies might prove to be the catalyst, or worsening trade tensions with China. That would add more cost to the system, as the item is then shipped twice.

  16. Harrold
    Jun 20, 2019 at 1:43 pm

    I’m curious now. What was the name of these sheets?

    • Jun 20, 2019 at 3:28 pm

      If the company pays me $1,000, I will mention the name on my site. I don’t do free promos :-]

      • stan6565
        Jun 20, 2019 at 3:43 pm

        Sheets R Us?

        Sorry, couldn’t resist it:)

  17. Mike Earussi
    Jun 21, 2019 at 5:51 am

    I prefer shopping locally at stores. Lack of product availability is the main reason I shop online. My local Kroger keeps discontinuing items I want which forces me to look elsewhere, same with Home Depot and Best Buy. I don’t think the company bean counters understand this and wind up creating a self-fulling prophecy by continuing to cut inventory.

    • Petunia
      Jun 21, 2019 at 4:13 pm

      Everything we bought online last week has had to be returned this week. It is starting to become a pain in the neck, the wait, the phone calls, the wait…

  18. Jun 24, 2019 at 7:49 am

    Very good and long article :)

Comments are closed.