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Walmart.com touts pricing clout for holidays
November 18, 2009 / 7:42 PM / in 8 years

Walmart.com touts pricing clout for holidays

SAN FRANCISCO (Reuters) - Walmart.com will pull no punches in its quest to win market share this holiday season, introducing 97-cent shipping on electronics and offering daily discounts the week after Thanksgiving, its chief executive said on Wednesday.

<p>A Walmart store is seen in Rogers, Arkansas, November 8, 2009. REUTERS/Lucy Nicholson</p>

The online division of Wal-Mart Stores Inc (WMT.N) has already set its sights on Amazon.com Inc’s (AMZN.O) lead in the market with steep price cuts on books and DVDs. Now it is digging deeper to gain an advantage starting on U.S. Thanksgiving next Thursday.

“The last three years on Thanksgiving Day, Walmart.com has been the online retailer with the most traffic, and we expect that that will happen again this year,” Walmart.com CEO Raul Vazquez told Reuters in an interview.

On Tuesday, Walmart.com began offering 97-cent shipping on electronics and this coming Monday, it will provide a glimpse of the deals that will be featured in its stores the day after Thanksgiving, or “Black Friday.”

On Thanksgiving Day, when it expects more than 10 million visits to its website, Vazquez said the retailer will offer 50 online-only items, including electronics, toys and video games, with price cuts of up to 40 percent.

Walmart.com will then offer online-only deals daily the week after Thanksgiving to win repeat business from shoppers.

Vazquez said Wal-Mart’s history gives it a leg up in competing on prices.

“When you’re a company like Wal-Mart that has stood for low prices for 40-plus years ... this is the playbook that we understand and we know how to run,” he said.

DEFENDING THE PENNY

Walmart.com already has made an aggressive push to win market share.

In October, it started selling health and beauty aids online, and it ignited a pricing war with online retail giant Amazon.com by slashing prices on its top 10 pre-ordered hardcover books to below $10 each. It has since cut prices on its top 10 pre-ordered DVD movies to just below $10.

Many of its price cuts were quickly mimicked by other competitors, like Target Corp (TGT.N). Walmart.com’s prices are now very often just one penny below its rivals. But Vazquez defended that 1-cent pricing gap.

“Does a penny matter? It absolutely matters because it’s about trust. When you’re committed to being the low price leader it has to be true whether it’s a penny or whether it’s ... a TV that’s $700,” he said.

The steep book price cuts triggered angst among the book industry and accusations that retailers were selling the books below cost.

While Wal-Mart has not directly commented on whether it is selling the books below cost, Vazquez said Walmart.com is not concerned about the profitability of each individual item. Instead, he said it is chasing volume so it can grow its business, become more efficient and lower costs.

“We just don’t look at our business an item at a time, we look at how is it that we can lower prices,” he said.

Vazquez said “we’ll see” when asked if the prices for books or DVDs would stay below $10 once the holiday season ends, but he said more price cuts will be coming.

“Next year is going to be one where we’ll continue to lower prices -- item prices, shipping prices - because that’s how we’ll achieve that goal that we have of being the most visited and valued online retail site,” he said.

In the meantime, it is prepared to defend its low prices, even if it means responding to unexpected cuts by competitors.

“If someone decides to test our commitment to low prices, we lower our price,” he said. “We’re going into the (holiday) in a position where we think we can be very aggressive in maintaining our low price promise.”

EVALUATING ONLINE GROCERY DELIVERY

Vazquez also said Walmart.com continues to study online grocery delivery. Last year, Walmart.com began allowing visitors to browse the groceries that it sells in its stores but they can not yet purchase them for home delivery.

He said Walmart.com wants to ensure it does not spread itself too thin or hurt its customer experience by overextending itself. He also said its online competitors are very good at providing sites that are easy to use, while delivering products quickly and with low prices.

“As we go into this business we know how high the bar is ... in terms of what customers expect,” he said. “So when we go into it, it will be with the commitment and understanding that we can provide a great customer experience.”

Editing by Phil Berlowitz and Carol Bishopric

Our Standards:The Thomson Reuters Trust Principles.
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