Wal-Mart’s Pay With Cash Option To Boost Online Sales

Wal-Mart (NYSE:WMT) recently launched a new “Pay with Cash” program, which allows customers to order products on its website and pay at a store within 48 hours. The program was launched in late April and has so far received a strong customer response. It is targeted at customers who do not own a credit, debit or prepaid card. Since the last year, Wal-Mart has been working toward boosting its online sales and is taking several initiatives to enhance its e-commerce platform.

We maintain a $71 price estimate for Wal-Mart’s stock, implying about 5% premium to the current market price.

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Innovative Strategy Steering Wal-Mart Ahead

We believe the ‘Pay with Cash’ offering has the potential to become big. It gives an incentive to customers to avoid spending time on selecting products in the store. The convenience of directly going to the store and picking the order would likely appeal to customers who lack time to look for products.

Within two months of launch, the program has received an overwhelming customer response. According to Joel Anderson, CEO of Walmart.com, the program now accounts for about 2% of all online orders and 30% of these customers are new to Walmart.com. Interestingly, the orders placed through Pay with Cash option are 50% larger than the average online order. ^[1]

We believe Wal-Mart’s efforts toward innovation and keeping pace with evolving consumer preferences will continue to yield positive results.

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1. See: Wal-Mart sees sales lift from Pay with Cash, Reuters [↩]