Mobile Keys E-Commerce at Wal-Mart

Wal-Mart is ready to go with Scan & Go.

Officials of the retailer at its annual shareholders meeting events earlier this month said they were encouraged by early results from “Scan & Go” technology introduced earlier this year at 200 stores and would release an app version for Android devices later this month.

Wal-Mart’s “Scan

The app is a more robust version of Wal-Mart’s current mobile application, including an in-store mode allowing price scanning and the ability to add mobile coupons. Officials describe it as one of the key tools in making e-commerce “the next great growth engine” for the company.

“E-commerce brings stores to the web, but mobile brings the web to the stores,” said Gibu Thomas, senior vice president of mobile and digital. “Now we can use the power of technology to provide digital capability to shoppers at stores that allow them to save time and money, and use that experience to migrate store-only customers to multichannel customers. This is an area we are really excited about.”

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Shannon Letts, vice president, multichannel and merchant innovations at Wal-Mart, said shoppers like the Scan & Go technology because by totaling their purchases as they go it allows them to stick to a budget while they shop. Designed to work with new self-checkouts and produce weighing stations also being rolled out to Wal-Mart locations, the technology could also be a major driver of improved efficiency and labor savings for Wal-Mart.

According to Thomas, more than half of Wal-Mart’s shoppers have smartphones — for customers under age 35, it’s 75%. App users also tend to be good Wal-Mart shoppers: Customer who have the Wal-Mart app make more visits every month and spend 40% more than non-app users, Thomas said. “Highly engaged” users make four more visits a month and account for 77% more spending, he added.

Around one-third of all traffic to Wal-Mart.com comes via mobile today — and more than half of those users for the first time. “This idea of using mobile and using it to create a whole new breed of customers is something we’re really excited about,” Thomas said.

Online Grocery Weak in U.S.

Wal-Mart’s efforts at online grocery ordering and delivery are not off to such a hot start.

Neil Ashe, president and chief executive officer of e-commerce for Wal-Mart, said an ongoing test of Internet grocery ordering and delivery in California has not been met with enough consumer demand to make it a viable business in the U.S. He added, however, that in markets that support it, Wal-Mart does grocery delivery “as effectively as anyone in the world.”

 “Grocery delivery is not new for us. We know what it is and we know how to do it,” Ashe said. “It requires market density — enough customers. It requires basket density — meaning you have to put enough items in that basket to make it work. And it requires route density, meaning you’ve got to put enough orders into a truck.”

Neil Ashe

Wal-Mart has been testing Internet-based grocery ordering and delivery through a store-pick model known as Walmart To Go in San Jose and San Francisco since 2011.

“We’ve proven we know how to do it,” Ashe said of the service, which remains in beta-test mode. “We haven’t proven market density. We haven’t proven that customers want it.”

Grocery delivery has worked for Wal-Mart in places like the United Kingdom, where the retailer operates Asda stores, Ashe said. But it benefited there from competitors that also offered the service.

 “The reason we think grocery delivery worked in the U.K. was that so many people threw in behind it — Tesco, Asda, Sainsbury’s, Ocado, etc.,” he said. “So there was density and enough customers who wanted it.

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“If somebody else wants to pay to develop the market [in the U.S.], we are ready to go,” he added. “We can pick from our own stores and roll that capability out in months. If the customers say that’s what they want, we are good to go.”

Officials said e-commerce for general merchandise and apparel was advancing behind new innovations, including a new global infrastructure, new search and homepage designs and expanding assortments, and a program that allows store staff to get sales credit for directing sales online. “That’s like giving a million promoters a focus on our online business,” Ashe said. “More importantly, it sends a message that at Wal-Mart we only care about one customer. Whether its online sales or offline sales, our associates can get credit for it.”

Ashe said shopper conversion has improved by 20% since the launch of a new search engine last year. The company is also using sophisticated online pricing tools allowing the retailer to assure it has the lowest prices on the web for the items customers want most.

Worldwide, Wal-Mart expects e-commerce sales of $10 billion this year.