Firing back at Amazon’s move less than three weeks ago, Walmart is now offering free next-day delivery to customers in Phoenix and Las Vegas, with plans to expand to Southern California within days and 75% of the U.S. population by the end of the year.
Marc Lore, president and CEO of Walmart eCommerce U.S., said in a blog post announcing the offering that it had been in the works for some time, to address questions about a “me too” reaction to Amazon’s one-day service.
Last October, Walmart CEO Doug McMillon told Quo Vadis Capital president John Zolidis that same day is the “final frontier” in the delivery wars. Zolidis added Walmart and Target are well-positioned to win based on their vast physical assets, technology and network strategies.
Walmart continually touts the absence of a membership fee with its fast delivery offerings, as Amazon charges Prime members $120 a year for the privilege. Walmart’s next-day service is mostly free – it does have a $35 order value threshold.
About 220,000 items are available to start for the Walmart delivery service, including household goods like diapers and laundry detergent, as well as toys and electronics, with more categories coming. Specific assortments and order cutoff times will vary by customer location.
Customers can select the “NextDay delivery” to see eligible items. Everything in their cart must be eligible to qualify.
Lore played up the supply chain aspect of the new offering in the blog post. He said Walmart achieves efficiencies by consolidating items into fewer boxes and delivering them from either a store or fulfillment center closest to the customer via ground service.
“We can offer fast, convenient shipping options because we’ve built a network of fulfillment assets that are strategically located across the U.S.,” Lore said. “We’ve also done extensive work to ensure we have the right products in the right fulfillment centers based on where customers are located and what they’re ordering.”
On the e-grocery side, Lore gave an update on Walmart’s grocery pickup and delivery programs. He said pickup will be available from 3,100 stores and same-day delivery from 1,600 stores by the end of 2019, covering about 80% and 50% of the U.S. population, respectively.
Stay tuned to see how Target responds to these moves from Amazon and Walmart.
Meyar Sheik, President and Chief Commerce Officer of ecommerce software provider Kibo, said to compete with the big guys retailers must leverage customer data and AI to optimize stock levels and fulfillment costs while providing fast and convenient delivery and return options.
“This will enable them to compete more effectively and offer a differentiated shopping experience while minding their bottom line,” Sheik said. He added retailers know that Amazon’s continual bar-raising exercise means more and more consumers will come to expect the same service level from everyone they buy from, leading to the arms race with Target and Walmart.