Walmart will now charge for order substitutions

Walmart has quietly changed a small-but-important aspect of its digital grocery business, the retail giant confirmed Tuesday.

It’s now going to charge customers for order substitutions made when a preferred item is out of stock. Previously, Walmart did not charge extra if a substituted item was more expensive than the original.

The change was first reported this week by Business Insider.

Walmart, in an email to WGB, said it is changing its digital-order substitution process and that shoppers will now be able to approve or reject proposed substitutions.

“We’re giving our customers more control of how and when items are substituted, including enhanced preferences and the ability to approve or reject substituted items,” a Walmart spokesperson said. “This flexibility is an important part of how we continue to give our customers more control over their pickup and delivery experience.”

In doing so, customers will now be charged for those item substitutions, the Bentonville, Arkansas-based retailer said, noting it will now be following “standard practice in the industry.”

Digital sales are a swiftly growing portion of Walmart’s business. Last month, the company said its digital sales climbed 12% during the second quarter, or 18% on a two-year, stacked basis.

“We’re becoming more digital, even more relevant as an omnichannel retailer,” CEO Douglas McMillon told analysts.

With still-surging grocery food prices, Walmart, the country’s largest grocery retailer, is seeing shoppers even more focused on value.

Those higher food prices are forcing some consumers to trade down and seek out less-expensive versions of favorite items as they increasingly gravitate toward private label products, Walmart said last month.

It’s unclear whether the change in substitution pricing will have an impact on overall grocery sales.

Walmart last year said it had built algorithms powered by artificial intelligence to boost shoppers’ acceptance of suggested substitutes to more than 95%. The technology relies on “hundreds of variables,” including size, type brand, price, shopper data, individual customer preference, current inventory and more, the retailer said at the time.

“The decision on how to substitute is complex and highly personal to each customer,” Walmart Global Tech EVP Srini Venkatesan said on the company’s blog. “If the wrong choice is made, it can negatively impact customer satisfaction and increase costs.”