Abstract

This case discusses the innovative pricing strategies adopted by Wal-Mart with a special focus on the pickup discounts option, in its price war against other online retail marketplaces, especially Amazon.com (Amazon). Wal-Mart had been developing several strategies in its price war with American e-commerce and cloud computing company, Amazon, to not only retain the position of the top retailer in the US but also to become the topmost online retail business as well. In one such move against Amazon, Wal-Mart announced that starting April 19, 2017, it would offer discounts on 10,000 online-only products on walmart.com, provided the shopper opted to pick up the ordered items from a Wal-Mart retail store rather than having them shipped to his/her address. Wal-Mart also promised that the discounts would be extended to more than 1 million items by the end of June 2017. However, this discount was not applicable to the items available in the physical stores of Wal-Mart and on Wal-Mart’s third-party marketplace. The case explores the multiple dimensions of the pickup discount and other pricing strategies like “Pick and Mix Pricing” of Walmart.com and their impact on the company and its competitors, particularly Amazon. It analyzes the several cost-cutting strategies adopted by Wal-Mart to offer its products at the lowest price possible to customers. The case also discusses how Wal-Mart with the help of its newly acquired niche e-commerce firms, plans to come up with newer strategies which will help the parent company to leverage its well-established physical retail outlets to increase its online sales. A part of the case also explores the various steps taken by Wal-Mart in its ‘omni-channel management’. The case facilitates a critical discussion on whether all these pricing decisions are sound enough for Wal-Mart to compete with Amazon and to become the market leader in online retail business. The case also discusses how Amazon had been increasing its presence on the brick-and-mortar retail space, intensifying the retail wars.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Changing ‘Pricing Environment’ of today, primarily due to the internet’s influence
• ‘Maximizing Market Share’ as a Pricing objective
• The concept of Value Pricing with special reference to ‘Every-Day Low Pricing’ (EDLP)
• Merits and demerits of Price Cuts
• Examining the Price-Adaptation strategy of ‘Price Discounts and Allowances’

Keywords

Pricing Decisions;Changing Pricing Environment;Value Pricing;Walmart;EDLP – Everyday Low Pricing;Price Discounts and Allowances;Omni-Channel Management