The Latest Target of Walmart’s Quest for Global Dominance: Your Car
Attention, Walmart shoppers: There’s a special on car insurance. This week the world’s largest retailer announced that it’s wading deeper into the financial sector pool by offering customers the ability to buy coverage for their ride through the Walmart website.
To make it happen, the retail behemoth has teamed up with Tranzutary Insurance Solutions and has created a price comparison website, AutoInsurance.com. Walmart won’t directly run the site; instead, it will drive customers to it through Web banners and in-store displays.
The insurance hub allows customers to compare their current coverage costs with price quotes from other vendors. Unlike current price comparison sites, where users must click through to other providers, on the AutoInsurance.com site individuals can purchase the insurance they want directly.
“This is something Walmart had been studying and hearing a lot from their customers on," Daniel Eckert, senior vice president of services at Walmart, told USA Today. “As we started to investigate what was out there in the marketplace, there was no simple, accessible, transparent way to do auto insurance.”
The expansion into car insurance also helps Walmart gain a greater foothold in the financial services industry. In 2007, the retailer faced intense criticism after it floated plans to create a Walmart bank. The idea brought such heat from lawmakers and traditional banking heavyweights that the retail outlet shelved the plan. Walmart then pivoted to offering the financial services that attract low-income customers who don’t have access to a bank: prepaid debit cards, check cashing, money transfers, and now car insurance.
Offering these services is good for business—and not just because of the fees associated with using them. If someone just cashed a payroll check, picked up a money transfer, or bought car insurance, that person probably won’t walk out of the brick-and-mortar Walmart store or click away from the website without taking advantage of all the rock-bottom prices. At a time when Walmart has received plenty of negative press for refusing to pay a living wage to its employees, the insurance site creates the perception that the company is one of the good guys—it’s looking out for cash-strapped customers.
But critics predict the public relations angle will fall flat. “No one is going to like Walmart more because you can buy auto insurance there,” said Yahoo Finance’s Jeff Macke. “They should just put a dentist in there and get your cavities filled. Just everything you hate underneath a 250,000-square-foot ceiling would be happening at Walmart.”
That said, Walmart successfully piloted AutoInsurance.com last year in Pennsylvania, and surveys of the site’s users show an average car insurance savings of $1,100 per year. On the basis of that triumph, the retailer will spend the rest of 2014 rolling out nationwide access to the site.