Walmart is Going After One of Costco’s Most Lucrative Businesses

AP

Walmart warehouse

Walmart is getting into the car business.

Walmart is going after one of Costco’s most lucrative businesses: car sales.

The retailer is diving into the car business through a partnership with CarSaver, a website that lets customers shop for, finance, and insure vehicles, Automotive News reports.

Under the partnership, CarSaver will open kiosks and information centers at Walmart stores where customers can shop for vehicles and make appointments at nearby car dealerships. If the appointments lead to a sale, CarSaver earns $350 from the transaction.

To start, CarSaver is opening kiosks in 25 Walmart stores in Houston, Dallas, Phoenix, and Oklahoma City on April 1.

CarSaver CEO Sean Wolfington told Automotive News that he based the Walmart program off of Costco’s wildly popular car-buying service.

He said he managed the Costco program for a dealership where he worked more than two decades ago.

“I was impressed with Costco’s program and how much easier it was for the dealership because consumers trusted Costco and appreciated the haggle-free pricing and hassle-free experience,” he told Automotive News. He said he became “convinced that this was the right way to sell cars — with a fair, transparent price, presented by brands the customer trusts most.”

REUTERS/Rick Wilking

Shelves are stacked with merchandise at a Wal-Mart Stores Inc company distribution center in Bentonville, Arkansas June 6, 2013.

Costco is one of the nation’s top car sellers. The company sold more than 465,000 cars last year, or about 1,000 cars per store.

CarSaver is aiming to sell about 1,000 cars annually through each Walmart store. So if the program is successful and expands to more than 450 stores, it could become a major threat to Costco’s service.

Walmart spokeswoman Molly Blakeman says the program is still in test mode, however.

CarSaver launched a pilot program last year at a Walmart store in Stuart, Florida.

“We’re still evaluating customer response,” Blakeman told Business Insider. “It’s not uncommon for us to test different customer offerings in our stores using our leased spaces.”

About 80% of the dealership appointments made through the Walmart store turn into sales, according to Automotive News.

So what does Walmart get out of the program?

The company has a landlord/tenant relationship with CarSaver like it does with others that occupy the leased space at the front of its stores, including McDonald’s and Smart Clips, Blakeman said.

Source: Business Insider SG