From food to health, all under one roof! Sounds impossible but not for Walmart (WMT, Financial), the world’s largest retail business. To date we have been associating the name WamMart with shopping carts full of FMCG products and consumer durables sporting a price tag with a heavy discount. People across the globe have also nicknamed Walmart the discount store.
The previous article titled WalMart Diversifies Into Medi-Care took you through Walmart’s initiative into healthcare, and now Walmart is in the process of adding a new feather to its healthcare cap. Let us take a closer look into this new feather.
Walmart to revolutionize the health insurance business
Walmart is taking one-stop shopping to another area: health insurance. The retail honcho is gearing up to work with DirectHealth.com, an online health insurance comparison site and agency, to allow shoppers to compare coverage options and enroll in Medicare plans or the public exchange plans created under the Affordable Care Act. The retail giant is all set to use its mammoth market coverage beyond selling packed products. Due to the dent in footfall created by the ecommerce sharks like Amazon (AMZN, Financial), this move will open up new horizon for Walmart in the retail arena.
This move can also thwart the drugstore chains such as Walgreen (WAG, Financial) and CVS Health Corporation (CVS, Financial), which are rapidly adding health care services. Since Walmart stores are already in place dotting the length and breadth of the globe, it has the required infrastructure platform to expand giving it an edge over the peers.
From the horse’s mouth
A Walmart spokesperson explained that through this facility it aims to target a specific band of customers. They include those whose employers scaled back their coverage to those who don't have any insurance. That has sent customers shopping around on various health care sites or at various kiosks set up by specific insurance companies. Hence Walmart with its enormous coverage looks all set to cash in on this health insurance shopping spree.
Walmart has started the program named "Healthcare Begins Here." Through this, customers can enroll online, by phone or at 2,700 of Walmart's more than 4,000 stores, starting Oct. 10. The stores will be staffed with independent insurance agents fromDirectHealth.com.
Last April, Walmart had entered into a contract with Autoinsurance.com to facilitate customers looking to buy car and automobile insurance. The customers can simply walk in a Walmart store and along with their regular purchase they can also compare and shop for automobile insurance.
DirectHealth.com and Autoinsurance.com are owned and operated by Tranzutary Insurance Solutions LLC, a subsidiary of Tranzact of Fort Lee, New Jersey, which set up Tranzutary specifically to work with Walmart. This strategy would not yield any direct earning for Walmart from the insurance sales, as most of the operating expense will be done by DirectHealth and it will bag the earnings. However, it will bring back the footfall count to the stores which had been taken away by the online retailers and will push the sales of over the counter products and give mileage to the healthcare units.
Hence from now if we find someone carrying a few insurance documents in their shopping cart along with other shelf items we should not be surprised, as it's quite possible that they are coming from a Walmart store, the new destination for insurance shopping.
The new roadmap
Walmart plans to go all out in advertising for this new move through both electronic media and print media. It will shortly launch a television commercial and a radio commercial. They will also do in-store promotions campaigns this month.
Since 2005, Walmart has allowed insurance agents from different insurance companies to walk into its stores and approach customers with different insurance proposals, but that created more confusion with the customers as they did not have the option of comparison.
To quote Labeed Diab, senior vice president and president of Walmart's health and wellness division, he said, “Research shows that more than 60 percent of people have difficulty understanding their health insurance options and nearly 40 percent feel they picked the wrong plan after enrollment. We saw a greater need to bring more transparency and simplicity and hence we came up with the in-store compare and shop facility for health insurance.”
As part of Walmart's foray into health care, it is testing 11 health care clinics run by Walmart itself that offer primary care such as health screenings and management of chronic conditions like diabetes. That's different from its 100 leased health care clinics in its stores that focus on basic services like flu shots.
The launch promo
Walmart intends to sweeten the experience of festive shoppers this time to the extent of healthcare as well. Through this new liaison with DirectHealth.com, Walmart will offer customers over 65 years of age access to more than 1,700 plans from 12 carriers including Aetna (AET, Financial), Cigna (CI, Financial), Humana (HUM, Financial) and United Healthcare (UNH, Financial) during the Medicare open enrollment period flagging off on October15, Ă‚ 2014 and ending on December 7, 2014.
For customers under the age of 65, they will offer access to thousands of health exchange plans from more than 300 carriers. The enrollment period will start on November 15, 2014 and end on February 15, 2015.
Final takeaway
As Walmart takes this extra step into the health care sector, the diversification is bound to benefit the retailer that is struggling to keep its profits intact after being hit by e-commerce giants who are eating into its market share at a rapid pace. Let’s stay hooked to this news, and closely watch how this new strategy adopted by the company helps to drive its top and bottom line in the positive direction.
