Walmart said it would expand its grocery delivery service to 100 metro areas by the end of the year, expanding a pilot it had been testing on a limited basis.
The Bentonville, Ark.-based retailer had recently been focusing to a large degree on the expansion of online ordering with store pickup, which is seen as more profitable.
In the expanded rollout of delivery, which will be available as a same-day or scheduled service, Walmart said it would employ its own in-store pickers to compile its shoppers’ orders. Those orders would then be delivered through crowd-sourced delivery platforms.
According to a report in the Wall Street Journal, the retailer will partner with Uber Technologies, among other delivery providers, to transport orders to consumers’ homes. Walmart currently works with Uber and Menlo Park, Calif.-based Deliv to offer delivery in its pilot markets. Walmart currently offers online delivery in six markets.
The fact that Walmart is rolling the offering out so extensively and is willing to make an investment in handling the order-picking itself demonstrates how committed the company is to being a leader in the online grocery business, said Bill Bishop, chief architect at consulting firm Brick Meets Click.
“It reflects a willingness to take on a cost that many others have been pushing off onto delivery services like Instacart and Shipt,” he said. “I think that’s probably the most important aspect of this.
“A second aspect is that this is a further indication that it will be Walmart, not Amazon, that is the big competitor to supermarkets for the online grocery shopping business,” he added.
While Amazon has excelled at providing a destination for one-off grocery products or hard-to-find specialty items, Walmart is positioning itself as more of a traditional shopping destination that can replace consumer’s weekly stock-up trip to the store, Bishop said.
Amazon seeks to compete for this business through its Amazon Fresh and Prime Now services, and is expanding its delivery from Whole Foods stores, but it cannot match the physical reach of Walmart’s delivery capacity, he said. In addition, many consumers shop Whole Foods only for certain items, Bishop noted.
Walmart said it has a three-week training program for its store pickers, and has already trained 18,000 employees for this task, with “thousands more” to be added this year.
The delivery service will cost $9.95 and requires a $30 minimum order. Online prices will be the same as those offered in-store, the company said — a point of distinction from third-party delivery companies that mark up prices.
Meanwhile, Walmart is continuing to roll out its click-and-collect service that allows consumers to shop online and pick up groceries at the store. The service is now available in 1,200 stores with 1,000 more to be added this year.
“Our commitment goes further than saving customers money,” said Tom Ward, VP of digital operations at Walmart U.S., in a statement. “Ninety percent of Americans live within 10 miles of a Walmart store, and we serve more than 150 million customers a week, which gives us a unique opportunity to make every day a little easier for busy families.”
According to the Wall Street Journal article, Walmart also will look at using its Jet.com ecommerce subsidiary to offer fast grocery delivery in New York City and other metro areas where Walmart lacks a presence. Jet currently offers grocery delivery in some markets through traditional mailing services such as Federal Express, the article noted.
Walmart’s move to expand its grocery delivery capabilities comes as several other retailers, including Costco, Kroger, Aldi and BJ’s Wholesale, have unveiled expanded delivery service areas through Instacart, which contracts with a network of independent shoppers to pick and deliver grocery orders in as little as one or two hours.
In addition, Amazon has recently expanded its delivery availability from Whole Foods through its Amazon Prime Now service to about a half dozen markets around the country.