- Offers same-day delivery in as little as three hours
- Is being expanded from six metro areas as of March 14, to more than 100 markets by year-end
- Will reach more than 40 percent of American households by the end of 2018
In a press release, Greg Foran, president and CEO, Walmart U.S., said, “We’re saving customers time by leveraging new technology, and connecting all the parts of our business into a single seamless shopping experience: great stores, easy pickup, fast delivery, and apps and websites that are simple to use. We’re serving our customers in ways that no one else can. Using our size and scale, we’re bringing the best of Walmart to customers across the country.”
Walmart indicated that groceries can be delivered to customers as soon as the same day for a $9.95 fee and a $30 minimum order. Walmart will rely on Walmart’s personal shoppers (18,000 in all) and crowd-sourced delivery services to deliver groceries.
Taking Aim at Amazon
Clearly, Walmart is taking aim at Amazon, which is offering Prime members a two-hour grocery service, leveraging Amazon’s ownership of Whole Foods to act as distribution centers. As Amazon expands into brick-and-mortar retailer (notably via its acquisition of Whole Foods), Walmart needs to double down to protect its turf. With a vast network of stores and already strong distribution system, Walmart is well positioned to do so.
But as my previous blog post noted, Walmart faces a tough battle as it balances the need to service customers who prefer to visit its brick-and-mortar stores with an increasingly strong focus on digital order and delivery, and do all of this while meeting Wall Street’s financial expectations. The difficulty of managing the logistics related to fulfillment of digital orders was partly blamed for the decrease in the growth rate of its online business during the fourth quarter of 2017, hurting Walmart’s earnings per share (although I speculate and continue to believe the earnings miss was driven by higher costs/higher than expected investments in this digital war given that overall revenue was up and actually exceed expectations).
A Multi-Front War
And Walmart faces plenty of competition with grocery delivery. Target and Kroger recently announced expansion into grocery delivery, and Instacart already has a well-regarded presence in this area. But Walmart has a number of cards to play. As I blogged earlier, Walmart also offers a growing in-store pick-up business to complement delivery. Walmart is betting that grocery shopping requires the human touch, whereas Amazon is investing in cashier-less operations (Amazon GO).
Walmart also possesses an unrelenting focus on self-improvement and even disruption – a focus that will serve the business well in this multi-front war.