's Clearance Deals Get an Annoying Twist


For some time, Walmart's (WMT) website has had a "Clearance" section -- and it had been growing: There are 2,921 items for sale in that section, and the prices are remarkably cheap. But the clearance program is testing a new, less customer-friendly wrinkle.

Now, some of the clearance products offered online have to be picked up at stores unless the customer wants to pay for home shipping. It's not clear why the company is trying this, but it may be because the prices on those products are so good, management hopes to use them as incentive to lure shoppers to their stores. The cost -- either to the world's largest retailer or to its customers -- to ship them would dwarf their prices.

Walmart seems to be offloading inventory and hope consumers will make additional purchases.

The beta program requiring buyers to pick up online clearance specials at brick-and-mortar outlets has clear potential benefits to the retailer, but it has its risks as well. Yes, those online customers may well buy other products when they visit Walmart stores. And Walmart could even price those clearance products to lose money under the theory that the other items bought by the shoppers picking them up will make the total order a profit -- the classic "loss leader" strategy.

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On the other hand, American shoppers are still being frugal -- and selective. If all someone wants is one specific item they see online, who's going to want to travel to a store to it pick up? Therein lies the risk for Walmart.

One clearance product Walmart has highlighted online is a $3 girl's shirt, marked down from $5. Next to the shirt is the notation "Sold in stores, stock status not available online." Another offering in the section: a Barnes and Noble (BKS) NOOK eBook Reader with Wi-Fi for $119.54, marked down from $148. Walmart will send it to a store for free, but it won't ship it to a customer's home without a fee.

Walmart has had what it calls "Site to Store" deliver for a long time, but the "In My Store" system is new. Walmart almost certainly is gambling that buyers won't just pick up that $3 shirt or discounted Nook. The merchandise experts at Walmart must believe people will be unable to avoid making additional purchases from aisle after aisle of low-priced products. But if they're wrong, this new strategy won't drive customers into stores -- it will drive them away from their website.

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