With Walmart+, Retailer Combines Digital Subscription Service and Physical Stores

When Walmart debuts its Walmart+ subscription service later this month, the retailer will go head to head with its closest rival, Amazon. For $98 per year, shoppers are expected to get benefits like same-day grocery deliveries and discounts on fuel at Walmart gas stations.

Regardless of which retailer comes out on top, there’s no doubt that many will see Walmart’s decision to launch a digital-first membership program as a turning point in brick-and-mortar retail and a concession on Walmart’s part that e-commerce is the way of the future, displacing rather than complementing old-school retail.

Marcel Hollerbach sees it differently.

As the chief marketing officer at Productsup, a data integration company that focuses on e-commerce, Hollerbach has a unique perspective on the retail marketing community. He believes that Walmart’s decision to launch a membership program points to just how well positioned retailers with physical locations are in the current climate, with the ability to quickly facilitate things like in-store returns and same-day deliveries of items that take much longer to ship by mail.

“Many retailers are misled to believe brick-and-mortar is dead, but the smart ones know the sweet spot of today’s retail landscape is making online and offline brand experiences complement each other,” Hollerbach says.

According to a survey conducted by Google and Ipsos, 83% of U.S. shoppers who visited a store in the last week said they used online search before going to the store. Brick-and-mortar retailers, like Walmart, Target, and others, can keep their feet planted in both the online and offline shopping worlds much more easily than digital-first retailers like Amazon.

What customers really want is the simplicity of ecommerce and the immediacy of brick-and-mortar, Hollerbach says.

Retailers are already using a number of online tactics to boost in-store traffic. It’s usually easier for brick-and-mortar stores to introduce better online experiences than it is for digital-first retailers to introduce real-world shopping experiences. For example, consumers love the convenience of shopping online, but waiting for delivery or paying shipping fees creates pain points. It’s easier for brick-and-mortar retailers to decrease the friction in their real-world experiences by offering things like curbside pickup and Buy Online, Pickup In-Store (BOPIS), than it is for an online-only retailer to roll out one-hour deliveries or local popup shops.

Despite having such a limited physical presence, Amazon has done an incredible job at creating the kinds of e-commerce experiences that consumers want. The company has simplified the way it handles online returns and brought down shipping times in recent years. Its Prime program already has more than 150 million members, and it was recently valued at $1.5 trillion. Compared to Walmart’s $337 billion valuation, Amazon has an incredible lead. But that doesn’t mean people should count Walmart out when it comes to the retailer’s chances of succeeding with its new Walmart+ subscription service.

Retailers with physical stores offer things that are harder for digital-first outlets to implement, like in-store returns for online orders and in-store promotions for subscribers. And Hollerbach says local inventory ads and Google My Business listings can prevent negative offline experiences by keeping consumers up to date on in-store inventory levels. Using technology to let shoppers know whether items at their local stores are in stock before they’ve left home is another example of where the sweet spot lies in online and offline brand experiences.

“We may be moving toward a digital-first society, but we still live in a physical world, so it’s important for retailers to understand how to blend online and offline shopping experiences,” he says.

While there is certainly an argument to be made that Walmart’s rollout of Walmart+ is an example of the company playing catch up to Amazon, it’s also a strategic decision that Hollerbach believes could pay dividends if the retailer is successful in its execution.

“For Walmart+ to be successful, Walmart will need to offer services that are difficult for other players like Amazon to replicate, like discounts on gas,” Hollerbach says. “The retailer’s large network of physical stores that are local and close to consumers is one competitive edge that Walmart should find ways to capitalize on.”

Stephanie Miles is a senior editor at Street Fight.