Wal-Mart on-line still looking for $$$.com; next on the agenda: 80,000 skus

Discount Store News, March 3, 1997 by Ed Rubinstein

With the coming expansion of merchandise selection at the Wal-Mart site, there will be more overlap with in-store merchandise than before. None of the merchandise at Sam's On-line is available in the clubs. A number of its on-line skus are not available in its stores.

And, consistent with Wal-Mart's in-store mantra, it is selling for less than the competition on the Net as well. Jupiter analyst Vanderbilt called the offering of Internet-only merchandise a viable traffic generator.

For instance, surfers can purchase high-end specialty items at the sites, such as china at the Sam's Club site. A five-piece place setting of McKinley china from Lenox is bargain-priced at $93, which is even less than the line sold at the Lenox outlet store in Lancaster, Pa. The same set at Saks, Macy's and Bloomingdales retails for at least $150.

Ordering at Wal-Mart On-line is relatively easy and personalized. First-time shoppers choose their own user identification and password, which serve as the keys to the on-line stores. This eliminates the need for customers to retype their addresses and charge card numbers. The system also uses a shopping basket-like system, which allows customers to place items in their carts as they shop and review them before placing orders.

As for the future, it will be interesting to see how Wal-Mart will improve on its initial model later this year or in 1998. The offering of 80,000 skus will likely do away with the shopping basket metaphor. And Wal-Mart may have to provide an on-line shopping experience that improves on its off-line one. For instance, the consensus is that consumers will not purchase single bottles of shampoo and other consumables through the Net. In most instances, the shipping costs alone could negate the benefit of Wal-Mart's low prices.

As such, two potential models for Wal-Mart's cybersales may lie in the relationship of customized marketing for consumers and large-volume purchases for businesses.

The Wal-Mart site will likely offer a large number of personalized merchandise that takes personalized shopping out of the stores and requires customer input. For example on-line surfers would be able to sample various types of digital wallpaper, place it in virtual rooms and decide if they want to make the purchase. These types of applications represent the replacement of in-store kiosks.

Allowing customers to use the Internet to "pre-shop" could be thrown into Wal-Mart's Internet sphere. In the future, Wal-Mart customers may be able to use their Internet site to tell whether an item is in stock at a given store, order it on-line and have it shipped or pick it up.

Tying together the Internet and in-store inventory is a relatively new opportunity that is being simplified through database technology. One retailer that expects to have this capability in the future is Service Merchandise.

While the Sam's site is currently targeted toward consumers rather than business members--as well as non-members, who can shop the site for 5% above member prices--business members could be able to save time by placing orders through Sam's Club On-line. This could boost member loyalty among foodservice establishments and other businesses that are frequent purchasers of dry goods in bulk.