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Walmart is adding a service that offers delivery straight to a customer’s kitchen as part of its membership program.
Walmart’s InHome service will now be offered as part of Walmart+, the company announced on Wednesday. There's no limit to how many times customers can use the service, or a requirement to tip.
It’s effectively an upgrade for Walmart+, as Walmart said the InHome service will be available for an additional $7 a month or $40 per year. The base price for Walmart+ is s $12.95 a month, or $98 a year.
Walmart is also growing the geographic footprint of InHome, aiming to reach more than 30 million US households this year. With Wednesday’s announcement, Walmart said it is expanding to Miami, Tampa, Orlando, Dallas, Austin, San Jose and San Francisco. This nearly doubles the footprint of locales where the service is available.
Launched in 2019, InHome is designed to provide grocery delivery for customers, even if they aren’t at home. Shoppers order groceries online. Then, a full-time Walmart associate enters their home via smartlock or garage door opener. (For those who don’t want to have someone enter their home, a doorstep delivery option is available).
Offering the “direct-to-fridge” service allows Walmart to make delivery more convenient. At the same time, it relies in part on the trust of consumers, who must be willing to provide entry into their homes.
By combining the two services, InHome will be added to the growing list of Walmart+ perks. Initially, the membership included free shipping and delivery, and scan-and-go service for in-store shopping. This year, it expanded a fuel discount to 10-cents a gallon and extended it to gas stations beyond Walmart, offered six free months of Spotify and held members-only deals events such as the recent Walmart+ Weekend. Walmart hasn’t yet revealed membership numbers for Walmart+, but leaders have said it is a key part of its growing digital business.
Walmart said it is making the move to combine the programs under one membership in response to asks from consumers who want to complete all of their ordering and delivery steps in one place.
“When Walmart+ members ask for something, we work around the clock to make it happen for them,” said Chris Cracchiolo, SVP and GM of Walmart+, in a statement. “Our members want options and a shopping experience that is easy to navigate and accommodates their individual needs, while saving them time and money—this is true now more than ever.”
Walmart said the move to bolster Walmart+ is among the steps it is taking to continue to invest in its ecommerce business, which grew 38% over the last two years.
Surcharges for suppliers coming
Elsewhere in its business, Walmart is planning to add fees to account for rising costs of fuel and transportation. According to Reuters, the company sent a memo to suppliers – or, the vendors that produce and provide goods sold by the company – detailing two new fees that will be enacted in August for those who use Walmart services to transport goods to warehouses or stores. The fees include a fuel surcharge, and a new “collect pickup charge” that will be calculated as a percentage of the cost of foods received.
Walmart is among many retailers facing rising costs during the current period of 40-year-high inflation. The company cited fuel costs as among the reasons it was cutting its full-year profit outlook in its first quarter earnings report.
It’s not alone among those upping fees, either. Amazon enacted a 5% fuel surcharge on third-party sellers in April, saying at the time that it intended the fee to be temporary.
At Walmart, the new charges “allow us to share cost accountability with our Collect suppliers, helping to enable us to meet our everyday low price commitment to our customers," the retailer’s memo said.
As costs rise, it grows more likely that they will be passed down the supply chain.
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Retail media networks must drive sales incrementality, a new report from the Association of National Advertisers states.
Retail media networks are creating a new layer to the relationship between brands and retailers, and a new report indicates that brands in particular are still navigating the growing pains.
The last two years brought fast growth of retail media networks, as retailers recognized the value of providing advertising opportunities through ecommerce marketplaces that grew rapidly during the pandemic, and the value of the first-party data they possessed in a world where third-party cookies and IDFA are becoming less valuable tools. For a historically low-margin business like retail, digital advertising also presents an opportunity for a high-margin business line of 50-70%.
Brands have proven to be eager adopters as they sought new ways to reach customers in this environment, as well. According to eMarketer, ad revenue from retail media networks will reach $52 billion in 2023 and $61 billion in 2024. Over the next two years, retail media will account for one in five digital ad dollars spent by marketers. The spend is only expected to grow. According to a survey from the Association of National Advertisers (ANA), 73% of brands said they expect to be spending somewhat or significantly more on retail media in the future than they do today.
However, this proliferation has also created “more marketing decisionmaking complexity for advertisers,” ANA CEO Bob Liodice said in a new report.
The need to navigate multiple networks and still-developing tools to maximize the opportunity presented by retail media is leading to a multitude of approaches. Layer on top of that the fact that brands are both selling goods and advertising through retailers, and it’s clear the landscape is being reshaped.
A recent report from the Association of National Advertisers uncovered the areas where fault lines may emerge under the surface:
- Reluctant buyers: 88% believe they are somewhat or heavily influenced by retailers to buy advertising on retail media networks.
- A multitude of players: 56% said they are currently working with five or more different retail media networks.
- Differing goals: Two-thirds of respondents see driving conversion as the most important investment. Only 12% indicated the most important objective was “to invest for future brand growth,” and 7% cited “to drive awareness.”
The results underscore key areas where relationships between brands and retailers can be strengthened.
Sales vs. growth. Retail media must be able to drive both conversions of a single sale in the lower funnel, and brand equity growth in the mid- to upper-funnel.
As one respondent put it, "The jury is still out on if the RMNs are truly driving sales incrementality."
This also has implications for how a brand is budgeting retail media. Some brands are shifting dollars from shopper marketing, brand marketing, and trade spending, which could put the emphasis on short-term sales. But as another respondent put it, "There is concern that while attribution shows RMNs are driving brand sales, they are not necessarily driving brand growth. This is especially concerning where incremental RMN spending is being sourced from brand building budgets."
Standard measurement. Brands want to see an improvement in transparency in measurement. They also want results to be measured in the same ways across platforms. Further, brands believe retail media networks are not fully optimized for their KPIs.
This all leaves room for retailers to show they truly understand what brands are seeking from retail media, and show how they are delivering, all while reducing complexity.
As the report put it, “The next phase of growth for RMNs and value creation for brands will be through RMNs assuming shared responsibility with advertisers for driving brand growth, and demonstrating the ability of their platforms to drive incrementality and positive ROAS for brands. In other words, the next stage of growth will be driven by results versus relationships.”