Kmart To Online Shoppers: No Credit or Debit Card? No Problem

Millions of Americans don't have credit or debit cards—and giant retailers like Kmart want them to start shopping online through pay-in-store functionality.

A new wave of retailers adopting pay-in-store online shopping is tailor-made for the 99%, but with an eye for the company's own bottom line: Don't have a credit card or debit card? No problem. Just reserve your items online and pay in-store.

Kmart announced yesterday that they are adopting in-store payments for items purchased on their website. The functionality is baked into the Shop Your Way loyalty card program, which gives Kmart e-retailer-style deep analytics about their brick-and-mortar customers. Customers reserve their goods online and travel to their local store, where they pay in cash (or pay via card for customers averse to entering credit card numbers online) and receive their purchases. The program requires customers to purchase payments within 48 hours, and also allows them to pay in-store and have deliveries sent to their home for furniture or other big items.

Kmart executives are blunt in public statements about this program being aimed directly at low-income customers. "With Pay in Store, we offer our members more choices and provide access to online shopping for a large, underserved portion of the U.S. population that wants the convenience of shopping online but does not have a credit card or is reluctant to submit their card information via the Internet," Kmart executive vice president Imran Jooma said in a statement. "We are addressing a need in a way no other large retailer is doing by giving members and customers ultimate flexibility, convenience, and choice in how they shop and pay and the satisfaction of walking out minutes later with their items in-hand."

Jooma's statement isn't entirely accurate, however: There is one other big retailer offering a similar program. Walmart was the first in the space with a Pay With Cash program for which launched in late April. Walmart's program allows users to pay in cash in-store for online purchases, but works more akin to a traditional layaway program. Both companies are going after the smart, smart strategy of damaging Amazon by courting demographics the e-retail giant usually ignores.

[Image: Flickr user Fan of Retail]

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  • Adam S. Cochran

    I'm not sure I fully understand the value here. If I'm headed to the store why not just buy it there? I see value in the home-delivery of larger items but that shouldn't be the central hook here -otherwise its poor service branding.

  • Hronay

    it's for people who don't have access to credit cards, they can now shop on line

  • Anthony Reardon

    Nice job Neal, thanks for sharing.

    So I remember when Walmart came out with a will-call ordering feature that allowed you to shop online and pick up at a local store. That leveraged it's huge logistics infrastructure in a way that comes very close to simply ordering online for direct delivery. They already move around inventory along these channels, so between money technically saved in shipping to store, and money saved distributing to the complexity of individual purchaser locations, they can offer a competitive pricepoint, convenience of online shopping to include anything in their entire catalog even if not in store, and the smooth experience of drive up loading.

    Now this move with Kmart is quite interesting too. I like the bypass of card for cash. Not sure how smart it is in terms of competition against Walmart or Amazon though. It does raise a dynamic of leverage that I'm wondering who will make the first move on. Amazon as an online purchase to direct drop has a logistical advantage in not having a physical retail environment. When you look at Walmart, it's terrifyingly beautiful how they try to squeeze out every penny from their model- yet they still have space left to their ceilings, people working registers, lights on and so on beyond their distribution hub overheads.

    The next level is to eliminate the retail shopping experience and bring it all online. You keep the local hubs as outlets, but no customers go in just product out, maybe including some kiosks outside for real-time shopping experience.

    Best, Anthony

  • Rome Qs

    Highly doubt the retail shopping experience will be eliminated considering how Amazon and Google are figuring out how to get into that sector.  Though I would not be surprised if we see a retail shopping experience that is so interwoven with the web experience that it would be hard to tell call it in store shopping still.

  • Anthony Reardon

    Good point. Interesting how web companies end up expanding to include proprietary products and in person retail experiences. I think there are advantages to be exploited, especially when you are talking about companies expanding their scope to full-scale technology providers from web to integrated device.

    Retail makes sense if you are aiming at leveraging your online brand exposure and aiming at high-end markets. You only need a relatively small boutique with minimal inventory on the floor, and once you close a sale you are jacked in with that consumer from then on i.e. Apple Store.

    However, I think when you talk mass consumption of daily use type household items and competing on price point, you're going to be talking something like 95% back room stocking and 5% storefront. Walmart will probably be thought of as "Wall" Mart, and I bet Kmart known as "Kiosk" Mart, lol!

    Another area of leverage that might go with this is minimal packaging. You know when you demonstrate a product virtually or maybe with an in-person sample you can package it up to impress, but the actual take home items can be a lot less expensive (margin) if delivered without any particularly specialized packaging (design, artwork, etc). Most of that value is built-in for influencing off-the shelf retail purchases, and disappears at the point-of-sale.

    Best, Anthony