Walmart begins testing home-delivery option
A Wal-Mart store.
STACEY VANEK SMITH: WalMart wants more business -- online. The company is testing an Internet grocery service, called Walmart-to-go. It will roll out in San Jose, Cali.
Our own Eve Troeh joins us live to talk about this. Hi Eve.
EVE TROEH: Hi.
SMITH: So why is Walmart doing this now?
TROEH: Well Walmart's had seven quarters of losses for in-store sales, so it's looking to online sales for a bright spot. It's web sales were up 70 percent last year. Also as it expands in markets where people can get their groceries delivered like New York and Chicago, it wants to challenge its competitors that already do that. Companies like FreshDirect, Peapod and AmazonFresh.
I spoke to Burt Flickenger at Strategic Resource Group. He says online sales require trust, so Walmart may have a little trouble there. It's known for cheap prices, not customer service. Like over the weekend, he says Walmart tried to draw in families by promising an Eastern Bunny photo op, and in many stores, the bunny never showed up.
BURT FLICKENGER: Children were upset, parents were upset, saying they weren't going to come back. If Walmart couldn't deliver the Easter Bunny it would seem that it would be a lot more difficult to delivery groceries every day.
SMITH: Oh my goodness. Well online groceries in general, Eve, have been a tricky area. There have been some big high-profit flame outs, some local success stories. How might Walmart fare as a player here?
TROEH: Well I'm told 11 dot-com start-ups went belly up trying to do this. But then most of those didn't have an grocery experience. Walmart already sells the most groceries of anybody -- up to a third of the whole U.S. market. And since it's starting with lower prices, delivery's probably going to be cheaper than other services. It's also about selection. Walmart-to-go will probably have more variety than those other services. Now Walmart hasn't spoken publically about its business model for this, but their beta website suggests it's set to go national pretty soon.
SMITH: Our own Eve Troeh in Los Angeles, thank you, Eve.
TROEH: Thank you.