Walmart to Enable Online Ordering for Food Stamp Recipients

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Wal-Mart Stores Inc.WMT unveiled a program wherein it will allow food stamp receivers to order food and groceries online. However, they will have to pick up the items from any of the five specific stores in the United States. Nevertheless, the company plans to expand the service to more markets in the coming months.

Per sources, the U.S. Department of Agriculture, which oversees the Supplemental Nutrition Assistance Program, provides food stamps to about 44 million people who earn wages below a certain range and use electronic benefits transfer (EBT) to pay for their purchases. Since EBT is non-transferable, the food stamp receiver needs to pick up the ordered grocery from the stores.

The move has opened doors for other grocers to experiment with EBT cards and allow shoppers to use EBT to shop grocery online and then later pick up from stores. FreshDirect, a grocery delivery service, has tested a pilot program in New York's Bronx neighborhood for EBT-dependent shoppers. North Carolina-based Lowes Foods and Harris Teeter, owned by The Kroger Company KR are planning to offer similar online grocery shopping services for EBT users.

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Walmart's Other Online Grocery Services

Walmart has been pushing itself constantly to match up with the e-commerce biggie Inc. AMZN . Walmart hasaggressively adopted a number of initiatives in this regard. Recently, it has teamed up with Alphabet Inc.'s GOOGL Google to enter the budding voice-shopping market and opened 1,000th Online Grocery Pickup location, which enables customers to order groceries online and pick them up at their local Walmart store.

Also, with Easy Reorder on, customers can repurchase items by looking into their previous in-store and online purchases records. The company also has a dedicated back-to-school destination on which enables customers to shop school supply lists for more than 1 million classrooms across the country.

The company also offers free two-day shipping service to U.S. shoppers on a minimum order of $35. In April, Walmart introduced a program wherein it offered discounts on online items, only if shoppers picked their orders from a nearby store. This acted as an added feature to Walmart's Walmart Pickup delivery service, which enables customers to place orders online and then pick them up from a store for free.

Walmart has also partnered with ride hailing services Uber and Lyft for speedy online grocery deliveries. In order to lower its costs of fulfilling online orders, Walmart has recently applied for a U.S. patent for a floating warehouse that can make deliveries via drones, and will bring products from the aircraft down to shoppers' homes.

Walmart has also undertaken many acquisitions to grow its e-commerce business. Since acquisition in September 2016, the company has acquired four e-commerce businesses - Bonobos, ShoeBuy, Moosejaw, ModCloth. Recently, the company plans to invest in online cosmetics startup Birchbox.

Recently, Walmart announced plans to consolidate its U.S. operations in February 2017 to compete with Amazon. The retailer has also reshuffled its food leadership teams in July. These initiatives have helped in improving operations.

If we look into the last six months' performance, we note that Wal-Mart's shares have rallied 14.7%, higher than the industry , which grew 9.6%. The broader Retail-Wholesale sector has increased 11.7% in the said time frame.

Bottom Line

As we can see, this Zacks Rank #3 (Hold) company is making huge investments in e-commerce activities to compete with Amazon. It is also focusing on online grocery shopping and delivery as it is a booming industry worth $12 billion in the United States. Therefore, the initiative to allow customers to use their EBT cards to order food online will aid the company's sales significantly. We believe the company will continue to make efforts toward this initiative to make it easier for food stamp receivers to shop online.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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