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Walmart ups the ante in online delivery

Free next-day service to begin rolling out in select markets

Walmart has fired the latest salvo in its delivery battle with Amazon.com Inc.

Marc Lore, president and CEO of Walmart eCommerce U.S., on Tuesday said Walmart.com plans to launch free next-day delivery of select nonfood and general merchandise items with no membership fee in several markets over the coming months.

Free Walmart NextDay delivery will first become available today in Phoenix and Las Vegas and then expand to Southern California “in the coming days,” according to Lore. Plans call for the service to roll out to about 75% of the U.S. population this year, including 40 of the top 50 major metropolitan markets.

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“NextDay delivery is a great complement to our same-day Grocery Pickup and Delivery options and free two-day shipping on millions of items,” Lore said in a blog post on Tuesday. “With the combination of these choices, we’re making every day easier for busy families. And with 90% of Americans living within 10 miles of a Walmart store, we’re well-positioned to offer even faster delivery to customers in the future.”

Initially, free NextDay delivery will be offered for about 220,000 frequently purchased items, “ranging from diapers and laundry detergent to toys and electronics, with more assortment to be added,” Lore said. The service carries a $35 order minimum, and the product selection will vary by customer location. To find out which items are eligible, shoppers click to NextDay delivery on Walmart.com and then begin adding products to their cart. All items in the cart must be NextDay-eligible to qualify for free delivery.

Examples of free NextDay-eligible products now available from Walmart.com in Phoenix and Las Vegas include Bounty paper towels, Great Value Everyday paper lunch plates, Equate Fresh Scent flushable wipes, Parent’s Choice diapers, Gentle Giants Canine Nutrition dog food and Little Tikes toy basketball set. Other items currently offered or becoming available through the service include groceries, health and wellness products, home goods and housewares, clothing and accessories, and household essentials.

“Our new NextDay delivery isn’t just great for customers, it also makes good business sense. Contrary to what you might think, it will cost us less — not more — to deliver orders the next day,” Lore explained. “That’s because eligible items come from a single fulfillment center located closest to the customer. This means the order ships in one box, or as few as possible, and it travels a shorter distance via inexpensive ground shipping. That’s in contrast to online orders that come in multiple boxes from multiple locations, which can be quite costly.”

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Walmart introduced same-day store pickup in 2011 and free two-day shipping with no membership fee in 2017. But Lore noted that the launch of Walmart Grocery Pickup and Delivery “has been a game-changer for busy families.” The retailer, which has about 4,700 U.S. stores, expects to have grocery pickup available from 3,100 stores and same-day grocery delivery from 1,600 stores by the end of 2019. That will make pickup accessible to roughly 80% of the U.S. population and delivery accessible to 50% for Walmart Grocery, he said.

Just over two weeks ago, rival Amazon had turned up the heat in online delivery. Chief Financial Officer Brian Olsavsky announced during the e-tail giant’s first-quarter earnings call that the company was preparing to introduce free one-day shipping for members of its Prime customer benefits program.

Seattle-based Amazon aims to spend $800 million in the current quarter to cut free delivery times for Prime members from two days to one, Olsavsky said, noting that faster delivery times will increase the number and types of products customers would buy from Amazon. “We really think it’s going to be ground-breaking for Prime customers,” he added.

Days after the call, Amazon and subsidiary Whole Foods Market announced the expansion of Prime Now same-day grocery delivery to 13 new metropolitan areas, increasing the service’s geographic coverage to 88 U.S. markets. In April, the companies also had expanded Prime Now Pickup to Whole Foods stores in 30 metro areas.

Amazon still leads by far in share of online grocery shoppers, but Walmart has gained ground. According to new data released Tuesday by Coresight Research, 62.5% of U.S. consumers who have purchased groceries online over the past 12 months did so through Amazon, compared with 37.4% for Walmart. Amazon’s share, though, is up just 3% from a year earlier while Walmart has seen a nearly 12% gain. The next closest retailer is Target, whose share of online grocery shoppers is less than half that of Walmart’s.

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