Walmart Offers Free Products as Digital Advertising Loses Its Luster

As online advertisements become less effective, brands are resorting to a traditional marketing tactic by distributing complimentary samples at nearby supermarkets.

In US stores, the companies sell everything from small peanut butters and sanitary napkins to Halloween-themed Oreos. While warehouse clubs like Costco and Sam’s have offered freebies for years, more and more retailers are finding that samples offer something digital marketing can’t: shoppers can try products before they buy them.

After conducting a successful trial, Walmart Inc. recently announced plans to expand the samples to more than 1,000 locations. In May, grocery giant Wakefern Food Corp. announced plans to install free vending machines in 95 ShopRite and The Fresh Grocer stores.

Sampling appeals to online audiences as well as groups. Smaller brands gain exposure and a potential new retail partner, while larger established companies can try out new products and iterations of existing ones.

“Free in-store sampling is a great way for brands — who are fed up with marketing opportunities on Facebook and Google — to get more exposure,” says Andrew Lipsman, an analyst at Insider Intelligence.

For years, businesses large and small have used online advertising to help target their products to a specific demographic. But it became less effective in 2021 when Apple Inc. began allowing iPhone users to block brands from tracking their online behavior. Meanwhile, several states, including California, passed digital privacy laws that made it harder for companies to access consumer data. Bottom line: Finding new customers through social media channels and keyword search ads is now much more expensive. Online retailers lost an average of $29 for each purchase from a new customer in 2022, more than triple the rate eight years earlier, according to SimplicityDX, a software company that helps brands with social media marketing campaigns.

Los Angeles entrepreneur Michelle Razavi wanted to increase sales of Elavi, a low-sugar nut butter she launched three years ago as an online brand. Ads on Instagram, Amazon and other sites had become more expensive and ineffective as competition for eyeballs increased. So Razavi called a manager at Costco Wholesale Corp. to ask about giving away samples in stores.

A few months later, he and co-founder Nikki Elliott were standing on prime real estate that Costco shoppers passed on their way to checkout, handing out cashew butter on banana slices. Over four weekends, they gave away about $8,000 worth of product and introduced their brand to thousands of shoppers at Costco warehouses in Los Angeles. They estimate that comparable sales and exposure would have cost them about $80,000 through Instagram ads and social media influencer campaigns.

Razavi says about 3% of Costco shoppers who try a product end up making a purchase, which is far more than the 1% who buy something after seeing a social media promotion. “In person, you can see people’s reactions and adjust your approach,” he says. “The web is just marketing on a dark screen.” Now he and his partner are negotiating to start selling nut butters in dozens of Costco stores.

Mondelez International Inc. uses free samples to raise awareness of new and seasonal products, such as Halloween-themed Oreos. The snack maker has also been handing out goody bags to door pick-up customers, usually with a QR code that they can use to add the items to their next order. The company is not giving up on online advertising, but is increasingly using it to show shoppers recipes with its products or a selection of snacks for, say, a college football watch party.

“We can’t just have a sampling table at Walmart and expect it to sell,” says Steve McGowan, director of shopper activation and strategic partnerships at Mondelez. “We have to have a multi-channel approach. We need digital media to alert people that this is in store, and possibly a digital offer to get them to buy the whole package.”

A key player in freebies is Chicago-based Freeosk, which sells automated sampling kiosks that dispense a wide variety of household names, including Sour Patch Kids, All detergent and Famous Amos cookies. Freeosk partners with leading grocers such as Safeway and Albertsons and has kiosks in over 1,400 locations across the country.

Buyers select samples via a smartphone app, which also collects useful customer data. If they like a certain product, they can fill their cart with products around the machine. Freeosk says that new buyers of a particular brand make up 70 percent of kiosk purchases. Digital brands are starting to understand the value of sampling, with more than 80% of retail spending happening in physical stores, “the audience is bigger than their online audience,” says CEO Matt Eichorn.

One transformer is Dude Products, a Chicago-based maker of disposable Dude Wipes. Founder Sean Riley says he’s using Freeosk dispensers at Sam’s Club stores for his individually wrapped wipes, and in an effort to disrupt the toilet paper industry by paying people to hand out larger packs of flushers at Target. He says that free bonuses typically increase sales by 20 percent.

“We’re a habit changer, and the best way to change someone’s habit is to give them a chance to try your product,” says Riley. “Some people build a business online and get stuck in a digital mindset in their marketing. Sharing samples will help you grow further.”