Wal-Mart is upping the ante in its bid to encourage more people to test its grocery pickup service. The world’s large retailer is now offering users up to $100 in referral e-Vouchers for sharing their referral across their social media feeds on Facebook and Twitter.
In an April 6 email to users, the Bentonville-based retailer said it will pay $10 for every referral shared through social media channels. The user who shares the link provided by Walmart Grocery will receive a $10 eVoucher and their friends also receive a $10 eVoucher when they register for the service using the provided link. The retailer states on its website that the eVoucher payments are limited to $10 per qualified referral on a minimum $50 order. Other limits include no more than 10 qualified referral payments per calendar year or 100 per lifetime.
Wal-Mart said it also reserves the right to pull the offer at its discretion in the test markets of Bentonville, Huntsville, Ala., Denver, Phoenix and San Jose, Calif. CEO Greg Foran said April 1 that the retailer will continue to test the pickup grocery format because consumers who use it have provided good feedback.
This referral program comes on the heels of a $10 discount recently offered to users who try the click and collect grocery pickup option in the test markets. The $10 discount was expanded from a $5 discount in previous weeks.
Retail experts said it’s somewhat unusual for Wal-Mart to provide blanket discounts like $10 off of a $50 grocery order, but this strategy is likely needed to help customers make the shift from in-store to online grocery shopping.
Christina Ellwood, CEO of Moreland Associates, noted on the Retail Wire discussion board that “price incentives are one way to entice shoppers to try buying online with pickup in-store.”
Ellwood said changing consumer behavior, whether it's with a new payment system or a new shopping approach, is always a challenge. She said incentives, personal demonstrations and video/ad demos are tried and true methods. She suggests retailers use a mixture of incentives with ample time between exposures.
“Click-and-collect is known in many other countries, is very popular so it's likely the resistance to change can be overcome here, too,” Ellwood noted.
Ken Lonyai, a digital innovation strategist and co-founder, ofScreenPlay InterActive, said Wal-Mart is on the right track testing the grocery pickup in multiple formats and then enticing shoppers to try the service with subtle incentives.
“For the majority of shoppers it will take incentive — a lot of incentive — to get them regularly shopping for CPG (consumer packaged goods) items and groceries online, especially for local pick-up, which is more effort for the consumer than home delivery,” Lonyai said.
“My guess is this will be a slow (multi-year) consumer training exercise and it will take many other brands in addition to Wal-Mart to re-educate shopper traits,” he added.
Wal-Mart told The City Wire it is continually testing new ideas with the grocery pickup format in Bentonville and in Huntsville, Ala., Phoenix, Denver and San Jose, Calif.
“Price is critical, period. Wal-Mart's involvement will only matter if they can truly make it convenient and less expensive than anything else. I would expect expansion,” said Dr. Stephen Needel, managing partner of Advanced Simulations.
Joel Rubison, president of Rubinson Partners, said Peapod offers a similar incentive to draw traffic to its grocery service and that is fairly common when consumers have to break their habits and engage in a new shopping behavior.
Most retail experts commenting on the practice said it will take time and more incentives for Wal-Mart and other retailers to boost consumer use of the format because it is a shift in behavior.
PROFIT MODEL, OPPORTUNITIES
Paula Rosenblum, managing partner with RSR Research, said there is a market for consumers who will buy online and pickup in a store just as there are those want their orders delivered. What is lacking, according to Rosenblum, is the profit model for these services.
“With very few exceptions, it has proven incredibly hard to make money doing the ‘pick’ for customers. I just see this as a loss leader ploy, and the company will likely recognize at some point that the problem is not driving demand, it's making money,” she added.
Adrian Weidmann, executive with StoreStream Metrics, believes the new shopping format will eventually emerge as the “new” retail. He said the obstacle now familiarity and trust. Once shoppers understand how the process works and realize the ease and convenience their behavior will change.