Customers to get discount on online-only items picked up in Walmart stores

Walmart customers would be able to avail a discount on 10,000 online-only items if they picked them up in-store. By end-June the discount would be expanded to over 1 million items.

Price cuts would vary depending on the product's size, cost and category, Marc Lore, president and CEO of Walmart US eCommerce, told CNBC.

"The point is that it's meant to be equivalent to what the last-mile delivery costs are," Lore said, CNBC reported.

Last-mile delivery referred to the final step of the shipping process before it reached the intended customer. It was the most expensive aspect of filling online orders, sometimes exceeding 50 per cent of an item's total delivery cost, according to McKinsey & Company.

The retailer would use the technology pioneered by Jet.com, the website founded by Lore which he sold to Wal-Mart last year, to calculate the savings. Eligible items would be noted on the company's website and would not include third-party products sold on the marketplace.

Bigger discounts would be available on inexpensive but heavy merchandise, which was costlier to ship than small products that carried a high price tag, Lore said.

In addition to cost savings, shoppers visiting stores to pick up an order also increased foot falls and gave retailers a second chance to make a sale. Though Wal-Mart had not provided details on those trends, Target had said that one-third of its shoppers who picked up online orders in stores bought additional merchandise on their store visits.

Lore told Fortune in an interview, "We are removing one of the most expensive portions of e-commerce transaction, which is last mile delivery."  He added: "It costs us less to ship to stores, so our customers should share in those savings."

According to commentators, the move also gave Walmart additional muscle to take on Amazon. They point out that one of Lore's mandates since becoming CEO of Walmart.com last year after selling Jet.com had been to equip Walmart.com with tools to beat all rivals, even Amazon on price.

According to a Recode report last month Walmart had told many suppliers at a summit this winter, that it wanted the lowest prices on 80 per cent of items sold.