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Advance Auto Parts Sees Opportunity in Walmart Partnership

“The beautiful thing about the arrangement with Walmart is both of us are very focused on the customer experience and want to make sure that our customers and Walmart’s customers are really excited about what we have to offer,” Advance Auto Parts CEO Tom Greco said of the company’s partnership with Walmart.

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Advance Auto Parts’ recently announced partnership with Walmart was a hot topic during Advance’s third-quarter earnings call.

In October, Advance and Walmart said they will create an Advance store on Walmart.com, and noted they will explore fulfillment options such as home delivery and same-day store pickup. During Advance’s Nov. 13 conference call, CEO Tom Greco fielded numerous questions from analysts about the arrangement.

While Advance and Walmart haven’t ironed out all the logistics, Greco emphasized that the two companies are aligned in their goal to “delight the customer.”

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“The beautiful thing about the arrangement with Walmart is both of us are very focused on the customer experience and want to make sure that our customers and Walmart’s customers are really excited about what we have to offer,” Greco said.

The companies will take a “phased approach” to launching the initiative, Greco noted, with the first phase expected to roll out in the first half of 2019. “It is a multiyear partnership, and we want to make sure that we get it right,” he added.

Some aspects of the partnership will be easier to launch than others, Greco acknowledged. When asked about how Advance plans to accommodate the various fulfillment options – such as same-day pickup at a Walmart store – Greco said: “We obviously have a lot to learn through this arrangement with Walmart.”

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“Obviously a pickup-today order at Advance generated through the Walmart website is easier for us to manage,” Greco added. “But keep in mind we have thousands of delivery vehicles. So our ability to essentially provide same-day service to Walmart stores if the customer decides they want to pick it up at a Walmart store – we can enable that. We just need to get that right and ensure that the operating procedures are standardized.”

One analyst asked how Advance will handle pricing for its products sold on the Walmart website.

“We control our pricing,” Greco answered. “So we’re going to offer a price. If we’re able to get the sale through the Walmart website, we’ll get the sale. If we don’t, we don’t.”

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Opportunities for Incremental Sales

Prior to announcing the partnership in October, Advance “looked at different alternatives with respect to building a strategic partnership where our set of skills and assets could be complementary to someone else,” Greco explained.

In Walmart, Advance saw a high-traffic retailer with a strong omnichannel presence and a shopper profile that’s “extremely similar” to that of Advance’s DIY customer.

“We absolutely believe there are incremental sales out there for us,” Greco asserted. “You think about 100 million people coming to that website every four weeks at Walmart. We have not disclosed how many people come to our website every four weeks, but it’s under 100 million. So there are going to be some people who go to that Walmart website who have not come to the Advance website.”

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The companies plan to create “an Advance store within a store” on the Walmart website, according to Greco.

“We think it helps build our brand and awareness. And it really helps Walmart with some category expertise that we believe together we can drive a lot of incremental sales with. We’re very excited about the partnership.”

Ultimately, Greco said, Advance sees the partnership “as an opportunity to extend the fundamental DIY value proposition we have to more customers.

“And our value proposition has always been the best parts in the industry, the best assortment in the industry, and speed and convenience. You think about pulling into an Advance store: You can get in and out of an Advance store, we have free services, we’ll charge your battery, we’ll change your windshield wipers for free. We have a number of speed-related and convenience-related benefits we offer to customers. And then trusted advice.

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“ … So it’s an extension of that value proposition to Walmart,” Greco said.

 

This story originally ran in Aftermarket News, a Babcox sister publication.

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