Walmart and Affirm: A match Amazon will find hard to beat
importance of the partnership’s new financing options shouldn’t be underestimated, writes Christopher Walton, former VP of Target Store of the Future.
Editor's note: The following is a guest post from Christopher Walton, an independent consultant and former vice president, Target Store of the Future (and is not affiliated with Affirm).
Over the last two weeks, retail has seen many big announcements. Amazon lowered prices on staple products at its newest toy, Whole Foods Market, and Walmart and Google unveiled their newest partnership surrounding Google Home and Google Express, as they both try to keep up with Amazon in the race for voice-activated commerce.
As Shakespeare once said, "Misery acquaints a man with strange bedfellows."
Old Will sure wasn’t kidding.
While both of these announcements were huge in the retail world (with huge being the scientific term for very f-ing important), neither one was the most important retail announcement.
The most important revelation, in fact, was about a small startup called Affirm.
At the end of August, news flashed across the wire that Walmart and Affirm were close to finalizing a pilot deal with each other. This is a game changer for three critical reasons:
1. Affirm was started by PayPal wunderkind Max Levchin
According to its website, Affirm is, "The financial company for everyday people. We offer affordable ways to buy online that are more flexible and transparent than any other credit option."
Through a simple online application process, Affirm customers can obtain loan financing with interest rates in the range of 10% to 30% for their desired online purchases. Customers can clearly and easily see what they will owe at the time of checkout online, with no hidden costs or surprises.
Here is an example, from Affirm’s website, of what a customer could expect to see online at checkout once approved for financing. The checkout experience is clean, simple, and easy:
2. Walmart is involved
All indications are that Walmart is aggressively going after scan-and-go/checkout-free shopping in their stores. Scan-and-go quite possibly will be the technology that most impacts physical retail in the next 10-15 years. This video I shot of Amazon’s scan-and-go capabilities highlights why:
Essentially, scan-and-go technology enables a person’s phone to become a remote control for any physical shopping experience. It enables customers to walk into any store, point their phone and buy any product at the push of a button without ever having to hassle with cashiers and checkout lanes again.
It is a faster, far superior way to shop, which is why Amazon is all over it with its app, and why Walmart is starting to deploy it rapidly within stores.
I applaud Marc-las (my mash up of Jet Founder Marc Lore and Walmart CEO Douglas McMillon) for their focus on this technology. In fact, I applaud Marc-las for nearly everything they are doing right now. You will understand why even more in just a few more seconds here.
3. Affirm and Walmart are a match made in heaven for budget conscious America
Affirm’s digital financing capabilities and Walmart’s scan-and-go capabilities, when combined, will stretch the bank accounts of all Americans — especially Americans who cannot afford Prime membership fees (uh oh Amazon).
Imagine common staples that people need to buy — things like food, deodorant or toothpaste, as seen here below from Walmart.com:
This three-pack of Crest (above) is emblematic of something people need to buy, but cannot always afford to do so (buying in bulk is a luxury). The Walmart/Affirm partnership changes this.
Now, with scan-and-go technology and Affirm’s financing technology, people could walk into a Walmart, scan any item on a shelf with Walmart’s app on their phones, and voila!
A screen pops up, and what used to be a three-pack of Crest for $5.00 is now suddenly the same three-pack but for $0.83/month for six months, or for $0.42/month for 12 months instead.
Holy s***! I’ll say it again with more emphasis. HOLY S***!
Not only does the Walmart and Affirm partnership provide unprecedented, individualized and dynamic pricing at shelf, it more importantly gives the average Walmart consumer the ability to afford more than they could otherwise.
The partnership gives the consumer the power to finance its purchases by item and to therefore stretch their personal budgets to newfound lengths.
Why else is this important? Because Walmart’s core business is food.
Meaning, more Americans will be able to put food on their tables, when they need it, at prices they can afford, on a schedule that works within their budgets.
Virtually half of Americans live paycheck to paycheck, according to a recent study conducted for GOBankingRates. The ability to stretch budgets is far more important to a greater swath of people than buying discounted tilapia and the ingredients for avocado toast at Whole Foods.
So a tip of the hat to you, Marc-las. This is truly an ingenious America-first move at a potentially larger scale than anything else we have seen up to this point.
Jeff Bezos — it’s your move. Oh, and let the bidding war for Affirm begin.