What does Walmart “renaissance” mean for retail and mobile wallets

Two weeks ago, Walmart announced its financial results for the 3rd quarter of this when, and we learned how short the memory of many experts and critics are.



For example, the media, previously calling Walmart a traditional retailer who fell into a lethargic sleep and a victim of the nimble Amazon, are now at the forefront of the Walmart support group. In just three days, the company has turned from a sleeping retail giant into an enterprising player, the main rival of Amazon, forcing it to sweat, and generally possessing everything necessary to curb the online competitor sweeping away everything in its path.



Of course, the competition between Amazon and Walmart has always been a very popular topic among journalists.



And we have repeatedly covered it over the past years, mainly in the context of how much effort anyone who dares to fight with Amazon or Walmart will need to take into account the assets, acquisitions and partnership agreements that companies have accumulated over all these years.



Over the past few years, both companies have launched a hail of strategic strikes at each other in the form of improvements and new products designed to help them outrun a competitor.



Walmart, however, always lagged behind on points, as he lacked presence in the digital world. This continued until he acquired Jet.com for $ 3 billion in 2016, and later, several niche online retailers such as Bonobos and ModCloth. Since then, the share of Walmart in the online space has grown steadily and quarterly, and according to the results of the 3rd quarter, the company reported a 50% increase in digital sales compared to the previous quarter.



Amazon is famous for its Internet business, which allowed it to revolutionize both e-commerce and traditional commerce, put physical retail players on their knees, and take billions of dollars of their revenue from them. In the summer, however, the company acquired the largest US physical grocery chain Whole Foods for $ 13 billion. This was not only a strategic move in the sought-after segment of the retail market, but also the tacit recognition by the company controlling almost half of online purchases in the US of the importance of physical locations as a tool for effective competition in key retail areas such as food.



Exchanges of blows continue, and Amazon and Walmart will no doubt be drawn to the tools and tactics that reflect the retail image that has evolved over the years, take advantage of the accumulated advantages and will fill in every way the gaps in their approaches.



The key element around which these solutions will be built will be the tool that both players have - their branded wallets, which have a serious potential for shaping consumer behavior and influencing the development of the entire retail market over the next few decades.

Amazon was first

Amazon not only invented the term “one-click purchase”, but also issued a patent for it in 1997, receiving it in 1999. The consumer’s ability to buy desired products without having to fill in a whole series of forms played a very important role in securing the company's position as the dominant online retailer.



Which she remains to this day.



The well-recognized yellow purchase button has become synonymous with the ability to choose from a multi-million-dollar product range and buy them online at low prices, getting free delivery right to the door in just one or two days. Amazon uses analytical methods to always offer the lowest possible prices, and this approach works very well. “Amazon's effect” - one of the reasons why more than 60% of consumers start searching for purchases on the company's site - allowed it to seize a large share in the book, stationery, sporting goods and even clothing segment.



Amazon even tried to separate Amazon Pay into a separate payment service.



Statistics show that Amazon Pay is used on 10% of the sites of the top 100 online US retailers. It is with his help that Kohl's customers will pay for Alexa series products that they want to buy there. The same method will be the main way to pay for purchases in online stores owned by Amazon merchants, such as Shopbob. There is also every reason to believe that Amazon Pay will soon get to Whole Foods payment terminals.



The online giant allows shoppers to replenish their Amazon Pay wallets with cash at retail outlets, such as 7-Eleven, giving people who prefer cash to shop online. The company even entered a small list of businesses approved by the US government as points of issuance of grocery products on food cards .



Amazon, together with Visa, launched the Amazon Prime Rewards Visa Signature Card, a branded credit card offering a five percent cashback on all purchases made on Amazon, two percent on purchases at restaurants and gas stations, and one percent on other purchases. Amazon is betting that the card will become the standard among Prime subscribers for shopping, just as the Discover program is used by its cardholders.



In addition, you cannot add a third-party wallet to Amazon Pay, and this will hardly ever be possible. However, a checking account can be tied to it, and in terms of significance, this opportunity can have an even greater impact on card networks than the appearance of their competitor Paypal has had in its time.



And of course, the company's payment service is the only way to purchase via Alexa on all devices of voice control of its family. The exception was not even the Amazon app for smartphones.

And then Walmart Pay appeared

Walmart Pay has been on the market for about a year and a half. The pilot project, launched at about the same time two years ago, ended with its launch in all stores of the network in the United States in June 2016.



Already in the first year of its existence, Walmart Pay achieved the same level of use and distribution, to achieve which Apple Pay took more than three years, and which Apply service eventually lost. Our current study on the spread of mobile payments in stores yields amazing results: 50% of Walmart customers report using the Walmart Pay app whenever they have the opportunity. No other wallet can boast even half the result.



This popularity and high penetration rate of Walmart Pay is the result of a stable service that the company provides in all its stores and within the application. Low prices are one of the key elements of the company's business, and the acquisition of Jet.com allowed it to access the pricing algorithm, in real time, calculating prices based on the size of the basket and the types of goods in it.



These figures have also become a reality since Walmart Pay from the very beginning offered something more than just a way to simplify the purchase of desired goods in the stores.



Using the Savings Catcher program, Walmart Pay allows buyers to present a check from a purchase at a store with cheaper prices, in exchange for which the presenter receives the price difference in the form of points to a special virtual account. He can use this balance for various purchases, as well as transfer it to other program participants.



Walmart Pay also acts as the main driver of online order growth and pickup groceries. This helped the company maintain its current audience and acquire new customers. This function, currently available at about 1,000 stores of the network, will be extended by another 1,000 new outlets next year. During the announcement of the results of the 3rd quarter, the head of the company, Doug McMillon, also called it the most important growth driver for the company's online business.



Walmart Pay also allows customers to take advantage of the recently launched Mobile Express Returns program, which allows them to return the purchased item to the store in just 30 seconds.



Walmart also has its own credit card, binding it to Walmart Pay allows you to get 3% cashback for November and December purchases. Although PayPal, Chase Pay, Visa Checkout and Masterpass are available as payment methods on Walmart.com, only branded debit, credit, virtual gift cards or Walmart prepaid cards can be attached to Walmart Pay. Currently, Walmart Pay cannot be used on Jet.com, Bonobos, ModCloth or Sam's Club, but this opportunity will probably become available over time.



However, shoppers can use Google's virtual assistant to make purchases through Walmart Pay. The retail giant did not reinvent its own solutions, but relied on the power of the Google platform to grow and expand its voice channel of interaction with customers.

What impact will wallets have on the future of retail?

Today, the consumer does not have a single payment method that works stably for most payment scenarios.



And before that he was.



A few years ago, we used plastic cards to pay for purchases in physical stores. These cards offered a steady online shopping experience. Stable, but terrible, to be exact.



However, despite this, consumers still continued to make online purchases and actively engaged in online shopping in various stores. They gained patience, sat down in front of the big screen and keyboard, and went online.



Cyber ​​Monday was actually created just to help people get closer to the experience of online shopping, annually inviting them to devote a whole day of their life to working on a PC with a dedicated Internet connection in the office - an experience designed to make a purchase online a little more tolerable. .



Today things are different.



But even so, consumers are not even trying to use digital wallets for in-store purchases, considering them a waste of time, and continue to make choices in favor of plastic cards. Or, increasingly, they make a remote purchase from mobile applications or browsers and come to pick up goods already purchased in this way from the store.



And all because these methods are familiar to them, they work stably and are fraught with a minimum of problems.



On the Internet, consumers have already learned to see the difference between horrible and normal sites. And they are increasingly turning to those of them who have integrated mobile payments into the experience of placing orders, not only to pay for orders as such, but also to offer some additional benefits.



For retailers offering this experience, as well as for consumers, the word Pay in the title means more than just a transaction. For the buyer, this is a guarantee that he will receive not only the best price without having to chase promo codes, but also free shipping within two days, and automatic recording of any rewards, discounts or coupons in addition.



The need to take all these points into account is the reason why payments have always been and will remain the foundation of Amazon and Walmart retail strategies. Their advantage in this direction will accumulate as they build their retail ecosystems. When a consumer clicks on the “Buy” button, he realizes that he gets more benefits with less effort. For their part, Amazon or Walmart know that in this way they increase the likelihood of selling and forming a persistent habit of accessing them and using their sites as the number one place for shopping.



So what does all this mean for retail players or wallets that don't have the words Amazon or Walmart in their names?



This means that it is time for digital wallets suppliers to go beyond the “Buy” button and become a platform that creates and makes possible the same holistic payment experience for other retailers.



It also means that it’s time to think deeply about how mobile and digital payments can be used to solve the most pressing problems of retailers, in the most sought-after segments, the most frequently visited types of establishments and stores. And besides, they need to find a way to provide additional value, and not just the ability to pay for pre-order and pick up coffee at Starbucks, lunch at Sweetgreen or dinner at GrubHub, as is already happening now. Such new solutions should be systemic and available at the same time in a variety of retail outlets.



But as Walmart and Amazon are systematically expanding their ecosystems both online and offline, the rest of the retail market and payment solutions have less time for leisurely thoughts on how this can be done.



Or where to start.