Dive Brief:

• Walmart is testing an expansion of its online grocery pickup for Supplemental Nutrition Assistance Program beneficiaries (or SNAP, commonly known as food stamps), in one store in the Houston area and four stores around Boise, ID, the company said in a corporate blog post.

• The move is an effort to expand the retail giant’s omnichannel services, a major part of its promise for low prices and convenience, regardless of how customers pay, according to the post, written by Walmart Vice President of Ecommerce Operations Mike Turner. "Everyone deserves this kind of satisfaction," he wrote. "Convenience shouldn’t be dictated by the way you pay." The customers use their Electronic Benefit Transfer cards, similar to debit cards, to pay online, according to the post.

• In January, six retailers — Amazon, FreshDirect, Safeway, ShopRite, Hy-Vee, Hart's Local Grocers and Dash's Market (and in February also Walmart) — were part of a government pilot to allow families supported by SNAP to buy groceries online. And in June, Amazon began offering discounted Prime memberships to customers participating in government assistance programs including Temporary Assistance for Needy Families (TANF), SNAP, and the Women, Infants, and Children Nutrition Program (WIC). 

Dive Insight:

SNAP monies account for an average 5.8% of sales at participating stores, according to a poll of 6,500 retail locations by the Food Marketing Institute. The federal government, and now Walmart, clearly see the need to include the growing area of online grocery buying. ​The USDA has been working on the infrastructure required for the pilot since the passage of the 2014 Farm Bill, which mandated support for online transaction capabilities for SNAP users.

In the past, the program has sought to broaden its reach and improve nutritional value through more participation from farmers markets and stricter rules that require grocers and retailers to include a wider variety of food, as well as products with higher nutritional value. Part of the proposal includes more than doubling the varieties of meats, dairy products, breads, fruits and vegetables that SNAP retailers must offer, requiring at least six of each. The pressure is mostly on the retailers to pare down prepared meals (which wouldn’t count toward such minimums, but could still be bought with SNAP benefits). Alternatives like shrimp, lamb or tofu would also meet the requirement, but the smaller retailers say those expensive items aren’t sought by their customers.

But Walmart's move could also be seen as part of the tug of war with Amazon for the pool of consumers who aren't Prime members and who make up a good portion of Walmart's customer base. Walmart has long developed services like check-cashing and money transfers to appeal to their customer base, which is typically older and less wealthy than Amazon’s.

In its massive push to boost e-commerce sales, Walmart is gunning for Amazon’s non-Prime customers: the company earlier this year scrapped its membership-based Shipping Pass program, for example, replacing it with free two-day delivery on orders over $35. Keith Anderson, vice president of strategy and insight at e-commerce analytics firm Profitero, in a phone conversation with Retail Dive compared Walmart’s strategy to streaming services that cater to cable television customers who would rather pay a la carte than pay hefty fees for a slew of channels they don’t want, akin to Amazon's membership and benefits.

Amazon didn’t let Walmart’s free shipping play go unanswered, though, quietly lowering its own free-shipping minimum a few weeks later to $35, just a year after raising it to $50.

Other recent moves by Amazon, including its new Prime opportunity for EBT-using customers, also suggest that the e-commerce giant isn’t content for Walmart to pick off shoppers who can’t, or won’t, pony up for Prime. In April, for example, the company announced a new service for people who can’t or choose not to use credit cards or bank accounts. In contrast to increasingly popular prepaid credit cards, Amazon Cash carries no fees, posing a challenge to both Walmart and PayPal.