Why Your CPG Brand Needs a Walmart E-commerce Strategy
Did you know that Walmart recently surpassed Apple to become the world’s third largest online retailer? How about that Walmart proclaimed itself to be a technology company at this year’s South By Southwest conference?
With the constant attention given to Amazon and its e-commerce dominance, you might think that focusing resources on other online retailers is futile. However, Walmart’s e-commerce strategy is clearly beginning to pay off. While the gap in total e-commerce sales between Walmart and Amazon remains vast, Walmart accelerated its quarterly e-commerce sales growth to a staggering 43% in Q4 2018.
Though this isn’t another Amazon versus Walmart article, it’s hard to separate the two retail giants, especially when Walmart CEO Doug McMillon says that the company “will continue to play offense and innovate as we shape the future of omni-retail.” Walmart’s ability to accelerate its growth with new innovations that reach more customers is a testament to its commitment to fighting off Amazon in the long run. As the boundaries between physical and online retail continue to blur, Walmart has positioned itself as an even stronger competitor in 2019.
Here are five reasons every CPG brand needs a dedicated Walmart e-commerce strategy.
Walmart Tops in Grocery Mindshare
Being that Walmart is already the biggest grocery retailer in the United States, it is in a superior position to take both mindshare and market share in online grocery now and into the future. Based on recent OneSpace consumer search insights, Walmart captured over 60 percent of the total search volume for milk, eggs and bread, indicating that a majority of online grocery shoppers are turning to Walmart for these grocery staples.
While Amazon is still the leader in online grocery sales, Walmart has been making major investments that appear to be paying off in terms of both attracting new e-commerce grocery shoppers and transitioning existing Walmart brick-and-mortar shoppers to online. In fact, Walmart has officially surpassed Amazon as the online grocer of choice among consumers, according to a survey from Retail Feedback Group.
When you consider the added benefits of having close to 5,000 physical stores, Walmart sets itself apart from any e-commerce retailer. Customers can buy items online and pick them up at physical locations, which offers a level of control they don’t have when they order items online and have them delivered. That added level of control becomes especially important for grocery categories like fresh and perishable foods. In fact, fresh and perishable categories have the highest consideration of curbside pickup fulfillment — 50% would consider it, and 34% even prefer this type of fulfillment for fresh products.
Additionally, the largest generational buying group, Millennials, prefer click and collect over home delivery. According to Janey Whiteside, Walmart’s chief customer officer, the company sees curbside pickup as a way to attract these younger shoppers.
Walmart kicked off 2019 with its biggest and first-ever cross-platform national marketing campaign for Walmart Grocery Pickup. The campaign launched with a commercial that aired during the 2019 Golden Globe awards and used famous cars from iconic movies, such as the Batmobile, the Ghostbusters ambulance, and the flying DeLorean from “Back to the Future.” The fact that Millennials in particular are generally very familiar with these cars should not be seen as a coincidence.
Walmart now has close to 2,100 online grocery pickup sites, covering 69% of U.S. households. In the next fiscal year, the retailer is looking to add another 1,000 curbside pickup locations.
Walmart’s physical footprint also gives it an advantage when it comes to grocery delivery. In fact, a survey from financial firm Citi (as cited by Grocery Dive) found that 29% of consumers ranked Walmart the best for online grocery delivery, followed by Amazon at 25%. The retailer is on track to offer the service from an estimated 1,600 stores by the end of the year, serving approximately 50% of the U.S. population. It’s also testing an unlimited grocery delivery plan in four U.S. cities, which costs shoppers $98 a year or $12.95 a month and includes the full assortment of grocery products. Walmart’s standard fee for grocery delivery is $10 per order.
In May 2018, Walmart launched a significant redesign of its website, which has contributed to its continued growth in e-commerce sales. The redesign includes a clean, modern visual makeover, but it more importantly highlights the retailer’s omnichannel capabilities. Prominently featured on the new home page are calls to action to start an order for grocery pickup and a section promoting free NextDay delivery on orders of $35 or more, an offer that allows Walmart to directly compete with Amazon Prime but without the membership fee.
The new Walmart website was designed to be more compelling and faster to shop, offer a much wider assortment, and have more local and personalized elements. A 2018 survey from GlobalData showed consumers reacted favorably to the new Walmart.com, noting that the site was “easier to shop” and “more inspirational and engaging.” The results of these changes align with Walmart’s focus on earning loyal repeat e-commerce customers.
Walmart Media Group
Despite being the largest retailer in the United States, Walmart’s CEO stated in a Bloomberg article that the company’s advertising business is “tiny.” With already tight grocery margins getting tighter as the competitive landscape heats up, Walmart knows that it needs to grow this area of the business. Amazon, for example, increased its advertising business to over $10 billion in 2018.
That is a main reason why Walmart recently decided to take back this previously outsourced business function and internally consolidate its advertising sales for its stores and websites. This move will allow Walmart to build out a bigger advertising business, but more importantly it gives immense differentiated value to its biggest CPG suppliers. According to Stefanie Jay, VP and General Manager of Walmart Media Group, Walmart will now be able “to help brands understand if someone saw their ad on Walmart’s platform or across the internet, and then purchased the product in-store or online.” Walmart Media Group believes there is no other retail partner that can give that level of marketing and purchasing data. Additionally, Walmart is expanding its in-house ad technology by acquiring startups like Polymorph Labs.
Walmart understands that a one-on-one battle with Amazon for e-commerce dominance might not be fair, so it is bringing in some friends to help.
Walmart’s strongest strategic partner is Google. In 2017, the two mega companies partnered on voice-based shopping through Google Express and its Home devices. That initial partnership idea recently grew to include grocery shopping with Walmart Voice Order, which works across all Google Assistant-powered platforms, not just the Google Home.
Walmart has partnered with Microsoft to migrate the retail giant’s internal business applications to the Microsoft Azure Cloud. This partnership could also enhance Walmart’s efforts in artificial intelligence and machine learning, thereby improving logistics, enhancing customer experience, and creating in-store efficiencies.
Walmart is making bets on how e-commerce delivery will shift in the future through a partnership with Waymo, formerly known as Google’s self-driving car project. Those in the pilot place an Online Grocery Pickup order, and Waymo’s self-driving cars do the rest, transporting customers to and from pickup.
Walmart is typically one of CPG and grocery manufacturers’ biggest customers. However, when it comes to e-commerce, Amazon is often the #1 priority for many brands. But with its continued investments in its online business and the growth of its grocery pickup and delivery programs, Walmart now presents an undeniable e-commerce opportunity for brands. Ignoring this opportunity could translate to lost revenue and market share down the line. That’s why you need a dedicated Walmart e-commerce strategy.
One of the biggest mistakes brands make when developing their Walmart e-commerce strategies is assuming that their success on Amazon can easily be translated into success on Walmart. Many brands use Amazon as a proxy for other retailers, especially when it comes to product content. However, Walmart has a unique search algorithm that requires different optimization tactics for maximum search visibility. Consumer behavior is also different on Walmart, which means the keywords you target on Amazon won’t be the same as the keywords you should target on Walmart. In other words, optimizing for search and conversion on Walmart requires a different strategy than optimizing on Amazon.
OneSpace Can Help
The world’s largest CPG brands trust OneSpace to keep their products at the top of search results and drive conversions across online retailers. Using our best-in-class content optimization platform and integrated database of consumer search insights, you can optimize your product content with unrivaled speed and scale. Contact us to learn more.