Let’s Unpack What Walmart WMT+0.2%+ Means To The Supply Chain
When the Walmart+ member delivery program launches on Sept. 15, the materials that make the shipping boxes, and the messaging on them, will likely be as important as the items inside.
Walmart+ is an evident effort to upstage Amazon AMZN+0.9% Prime AMZN+0.9%, with $98-a-year memberships that include free (sometimes same-day) delivery on orders of at least $35 and fuel discounts. Other perks are expected to follow, and Walmart is offering a 15-day free trial.
If Walmart+ encourages the same volume of orders as Amazon Prime, especially as shoppers shift to online shopping in the midst of the Covid-19 pandemic, it could generate hundreds of millions of packages a month. Amazon, which charges $119 a year for Prime, shipped 415 million packages in July alone.
Making and moving those packages takes resources, which is why Walmart’s existing and ongoing packaging and fulfillment guidelines will probably pressure all online retail and suppliers to improve sustainability and related costs. Walmart has for years been encouraging its supply chains to follow more strict environmental suggestions, as detailed in its Sustainable Packaging Playbook. Among its supplier goals: cut emissions by 1 gigaton by 2030 (that’s the equivalent of taking 211 million passenger vehicles off the roads for a year).
Walmart plans to reduce its own operation emissions by 18% come 2025 (from 2015). So it should be no surprise it will bring some of the same thinking to the processes behind the Walmart+ packaging and delivery system.
Walmart+ Will Bring 3 New Rules To Online Delivery
However, sustainable delivery encompasses more than earth-friendly packaging and limited greenhouse gas emissions. The system can only be optimized if the package recipients – the customers – recognize their roles in the process, and feel a duty to be good environmental citizens. Here are three guidelines of how retailers, customers and suppliers should expect Walmart+ will change overall online delivery, based on its past and ongoing practices.
- Cleaner packaging. Based on its Sustainable Packaging Playbook, Walmart will closely monitor the materials, weight and recycling of its online-order containers. The best-practice tips the playbook provides include reducing packaging, using recycled and renewable materials and favoring certified virgin tree fibers, to prevent deforestation. These practices apply across the entire packaging system, from individual detergent cartons to shipment boxes. Walmart asks, for example, if there are unnecessary empty spaces within all product packaging. It also encourages its suppliers to eliminate the use of “priority” chemicals, such carcinogens, toxins or other chemicals that can be harmful to people or the environment. Lastly, Walmart wants its suppliers to measure their sustainability performances, establish goals and publicly report their progress.
- Return-trip packaging. Fulfillment is a complex system that includes manufacturing, warehousing, trucks and sometimes a return trip. Online order returns generated more than 15 million metric tons of carbon emissions (equal to 3 million cars) annually before the pandemic, so the likelihood of returns will probably be engineered into Walmart+. Easy return labels and lightweight packaging will be essential. And because shoppers can return items to the store rather than ship them – which should save energy – chances are Walmart will encourage in-store returns. It might, for example, design its boxes and pouches to make store returns easier, with perforated handles, perhaps. The retailer could also fashion its existing online-order pickup towers, located at more than 700 stores, to serve the dual purpose of accepting returns.
- Communicative packaging. The impression that arriving orders make, to all family members, matters a lot. Walmart+ boxes may clearly state that they are made from clean materials, for example. They could include upbeat sayings or tips on how to be a better social and environmental citizen. Children are an important influencer in this respect, and Walmart likely knows this. The retailer released its annual “hot toys” for the holidays list less than two weeks before launching Walmart+, indicating that a lot of the products Walmart+ delivers will be for kids. Indeed, sales of toys jumped in the double digits since the pandemic-related shutdowns, and more than half were made online at the peak of the pandemic, compared with 25% to 30% pre-pandemic.
Retailers Must Deliver Green Shipping Solutions
Walmart’s sustainability efforts are good for the planet, but they also should be good for all of retail and its suppliers. Reduced packaging means fewer materials and lighter shipments, which can save billions of dollars a year.
Even more important, consumers are paying closer attention to packaging waste. More than 90% of shoppers who received an online order said they noticed excess packaging, according to a recent survey by DS Smith, a sustainable packaging company. Of those consumers, 54% said they would rethink ordering again from the same company.
Walmart’s sustainability efforts demonstrate the kind of leadership we need to see in the retail world, especially from the biggest players. Let’s hope their inclusion in Walmart+ is a true plus to the global community.
Read Bryan's article on Back-to-School Spending: 6 Predictions For Back-To-School Spending, And How Staples, Walmart And Others Act
Bryan Pearson is a Featured Contributor to The Wise Marketer and currently serves as a director and strategic advisor to a number of loyalty-related organizations. He is the former CEO of LoyaltyOne.
This article originally appeared in Forbes. Be sure to follow Bryan on Twitter for more on retail, loyalty, and the customer experience.