Will Shipping Pass Add Value to Walmart?

There are serious problems with Shipping Pass; one of Walmart Stores Inc.’s (NYSE: WMT) key initiatives to increase its online market share.

Being a cheapskate; who lives over 60 miles from the nearest Walmart store, I signed up for Shipping Pass a few weeks ago. The service; which offers unlimited two day shipping on items ordered through Walmart.com for $49 a year, sounded like a really good deal to me.

My experience indicates that Walmart is having a very hard time implementing Shipping Pass, and delivering an adequate level of customer service. Part of the reason; I signed up for the service was to see how well it actually worked, for stock research.

Being a value investor; and a skeptic, I like to see if stuff actually works before investing in it. Therefore, my orders were as much an experiment, as anything else. A Beta Test of Walmart’s Beta Test, if you will and the results were not very gratifying.

My Experience with Shipping Pass

Here are the experiences that I had with Shipping Pass. I ordered five items through it: a box of Tide laundry detergent, some denture cleaner for my dad, a container of Lubriderm skin lotion, a tube of SPF 50 sunscreen, and a box of Avery shipping labels. The results I got reveal incredibly inconsistent order fulfillment and customer service.

They are as follows:

• The Tide and denture cleanser arrived on time with no problems. FedEx delivered them right to my door within two business days; as advertised.

 

• The Lubriderm arrived on time, but it was the wrong variety. I had clearly ordered Fragrance Free, I got coconut butter. I took the Lubriderm back to a Walmart store in Canon City, Colorado. The nice people at the customer service desk did not know how to process the return. It took two of them five minutes how to figure out how to complete the return. Once they completed the return, that store had no fragrance free Lubriderm; so I ended up by buying it from Walgreens.

 

• I had no problem ordering the labels and the sunscreen; but they were shipped via standard value shipping and not two day. That meant they were sent to the Post Office via FedEx Smart Post; which took a week and not two days. I ordered the items on the 10^th and 12^th, the expected day of arrival was the 21^st.

• When I eventually contacted Walmart customer service; I had to wait about five minutes to chat with Joseph G. There was little he could do; except file a report with higher ups. He did confirm that I had ordered through Shipping Pass, and said higher ups were working on it. That indicates other people may have had this problem.

 

In my rather unscientific test and examination of Walmart’s Shipping Pass, I discovered some serious problems with the system. A major flaw I noticed was that items were shipped from stores, long distance. For example the sunscreen was shipped from Idaho to Memphis and back to Colorado.

This might be the source of the trouble; associates in the stores, might be shipping items supposed to go two-day via value shipping. If that is true there is a serious lack of training at Walmart.

One also to wonder what is going on at all those expensive fulfillment centers, Walmart built in the last few years? Why are items being shipped from stores; and not from there? It sounds as if Walmart might have serious inventory problems.

If Walmart cannot get Shipping Pass to work, doubt is certainly cast upon other initiatives such as the same-delivery effort with Uber and Lyft. Is the company capable of executing effective ecommerce or not?

Interestingly enough, some of Walmart’s online services work well. Just after I ordered the labels and the sunscreen, I ordered some lotion via a third party supplier through Walmart’s Marketplace. That product arrived within two days, yet it was shipped by the supplier; Pharmapacks, not Walmart.

Walmart’s Customer Service not Up to Amazon’s Level

The major lesson I learned was that Walmart’s customer service is not up to Amazon’s level. The retail giant is not yet capable of order fulfillment or online customer service on Amazon’s level; although it does appear to be learning.

I will keep fooling around with Shipping Pass and see what happens. Since it is new, launched only last month; I will give Walmart the benefit of the doubt. It will be interesting to see if Walmart can correct these problems or not. If it cannot; Shipping Pass will drive customers away and waste the company’s money.

Finally it is apparent that online retail is a lot harder than it looks. If an organization with Walmart’s resources has such troubles transitioning to online retail, what hope do outfits like Target (NYSE: TGT) have? It might be too late for anybody to effectively compete with Amazon.