Free samples with your curbside groceries: How brands are wooing Walmart's online shoppers

• The pandemic has inspired consumer packaged goods brands like General Mills and Cure Hydration to experiment with new ways to introduce their products to customers, such as adding samples to curbside pickup orders or to swag bags handed out at events.
• Major retailers, such as Walmart, see the samples as a way to delight customers and make money as they try to offset the costs of fulfilling e-commerce orders.
• Walmart has also tested welcome boxes of product samples for customers who join its new subscription service Walmart+.

Cure Hydration's lucky break came at a strange time.

Walmart, CVS and Amazon-owned Whole Foods began carrying the start-up's fruit-flavored hydration powder during the pandemic. Yet boxes and packets of the electrolyte drink often lingered in the back of stores as busy employees tried to replenish shelves with high-demand items like hand sanitizer and paper towels. Its major sales driver — offering free samples at sports events like triathlons or after class at fitness studios — came to a halt. Customers weren't discovering the brand as they shopped online or didn't see it when they sped through aisles on trips to the store.

So instead, Cure Hydration's founder and CEO Lauren Picasso decided to try another strategy to get her products into shoppers' baskets: Free samples tucked into Walmart's curbside pickup orders.

"As an emerging brand, we wanted to find a way to get in front of customers knowing they're not browsing in stores as much as they used to," she said.

She said the samples lifted sales, while costing less and scaling more easily across about 1,000 stores.

Add sampling to the list of pandemic-related changes that may stick. As more grocery shoppers use curbside pickup and delivery, consumer packaged goods companies have had to experiment with new ways to get their products in front of people. Major retailers are trying to capitalize on the surge in demand by charging brands for access to their shoppers and data they've gathered about their preferences — while also delighting customers with freebies.

A money-making opportunity

For years, consumer packaged goods companies have paid retailers for prime real estate in stores that helps them grab a shoppers' attention — such as endcaps, a display of products at the end of an aisle. That equation has changed as more shoppers retrieve their bagged purchases in a stores' parking lot after ordering them online.

Online grocery sales in the U.S. grew 54% in 2020 and are expected to exceed $100 billion for the first time this year, according to eMarketer. The market research firm said those habits will outlast the pandemic because shoppers see it as a more convenient way to shop even after they are vaccinated. By next year, eMarketer expects more than half of the U.S. population will be online grocery buyers. By 2023, it estimated that online grocery sales will make up 11.2% of total U.S. grocery sales.

Walmart's U.S. e-commerce sales grew 79% last fiscal year compared with the prior one, fueled by grocery orders, but has yet to turn a profit.

Sampling is a money-making opportunity for Walmart. The retailer began a pickup and delivery sampling program in 2014, but it is getting more attention as more customer traffic shifts to the parking lot. The retailer charges companies when their product is added to a curbside or delivery order.

Walmart is looking for new revenue streams as it juggles additional costs that come with online orders, like picking grocery orders off shelves and shipping purchases to customers. At a recent investor meeting, Walmart CEO Doug McMillon said it wants to use its reach as the world's largest retailer to grow other businesses, including advertising. He said it wants to monetize the data it collects about shoppers.

Brands of all sizes

Even the big brands are taking note. General Mills has revved up the number of samples that it has paid to place in curbside pickup orders at retailers, including Walmart, Kroger and Target.

Jay Picconatto, brand experience director of commerce marketing at General Mills, said sampling in grocery pickup "is something we wouldn't have even touched two years ago or 18 months ago." Yet as store traffic plummeted last spring and retailers limited in-store demos, he said the company leaned in aggressively.

For example, some Walmart shoppers may have received a sample of Old El Paso taco seasoning with recipe cards around Cinco de Mayo. Walmart handed out its Annie's Fruit Snacks and Bunny Grahams at a Walmart drive-in movie event.

"Then, we found, hey, it works and we actually like what is happening," he said. With more shoppers picking up groceries curbside, he said, "It's a place we want to continue to play."

Alvis Washington, Walmart's vice president of marketing, store design, innovation and experience, said its sampling program can help brands connect with the right customers. Personalizing the samples that a customer receives is a key goal.

It also can be used to deepen customer loyalty with Walmart, Washington said. It turned a few of its store parking lots into drive-in movie theaters and trick-or-treating sites. At one store near its Arkansas headquarters, it had a special event for Mother's Day. It lit up the sky above several stores for a holiday drone show.

At each event, attendees were surprised with a swag bag of samples. Washington said the company wants to scale that across more of its Walmart and Sam's Club stores. He described it as a "triple win" — making Walmart a more appealing shopping destination, offering a fun activity for customers and creating an opportunity for suppliers "to get their new and innovative products in front of customers."

He said Walmart may start charging an insertion fee for the swag bags, like it does with its business model for curbside pickup samples, along with having companies cover the cost of the products.

Walmart has also tested a welcome box for customers who join Walmart+, its subscription service that it launched in the fall. Each one includes a Walmart+ branded tote bag and product samples. He said the retailer is expanding the program and plans to tailor the box more to customer preferences in the future.

More bang for the buck

Picasso said the new approaches to nudge product discovery are easier and more cost-effective. On a good day, she said an in-store demo handed out about 300 samples — which roughly cost 50 cents per sample, including the fee for reserving space at a store and staffing it. She said the cost of including a sample in a curbside pickup order or swag bag varies by retailer, but typically ranges between 10 cents to 30 cents apiece.

"It ends up being much more economical to get into people's hands in other ways," she said.

Picasso said the company is testing demo stations again at a few Whole Foods stores, with a pandemic twist. Each powder packet is packaged individually and people can pick up a stick of power and a branded bottled water, so they can safely try the product at home.

For other food and beverage products, though, she said the "ick" factor may outlast the pandemic as shoppers remain germ-conscious and don't want to eat a chopped-up granola bar.

Plus, she said, retailers are getting more sophisticated and allowing companies to add samples to some curbside pickup orders and not others based on a customers' buying history — a more targeted approach than relying on the right strangers to walk by and pick up a sample.

General Mills will continue to pay for store displays, Picconatto said. But, he said the pandemic has changed "how we think about the balance of in-store levers and online levers" — particularly as e-commerce drives a higher percentage of its overall sales.

"What we ultimately really care about is getting on that shopping list," he said.

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