Walmart Has The Upper Hand In The Grocery Delivery Battle

Walmart announced last week that it is expanding its grocery delivery subscription program, Delivery Unlimited, to 1,400 stores across the country. Customers at select locations will have the option of paying a yearly fee of $98 or $12.95 a month to entitle them to delivery of an unlimited number of grocery orders from the retailing giant. Walmart customers will also have the option to pay as they go for individual deliveries instead of joining the subscription plan.

The announcement was a big win in the eyes of the RetailWire BrainTrust in an online discussion last week.

“You have to give it to Walmart, they’re starting to actually beat Amazon (and traditional grocers) to the punch,” wrote Lee Peterson, EVP of thought leadership and marketing at WD Partners. “In this case, they’ve got the upper hand in that they’ve got the logistics, the physical presence and the raw wherewithal to make it all happen, even if it takes time to become highly profitable (and it will).”

“Welcome to the great world of subscription revenues, Walmart!” wrote Kai Clarke, CMO of American Retail Consultants. “Amazon does it to create a profitable bottom line. So does Costco, Sam’s Club (part of Walmart), and many others. Applying this to the grocery channel, where delivery has even more of presence, is just a no-brainer.”

The retailer decided to roll out its subscription plan after conducting pilots in Houston, Miami, Salt Lake City and Tampa earlier this year. Walmart found the results in its tests so promising that it made the decision to expand it to all 200 metropolitan markets where it currently delivers groceries. That means that more than 1,600 stores covering about half of the country will have the service in place by the end of the year. Walmart is offering a free 15-day membership to get customers to trial the service.

“We’ve been investing in our online grocery business by quickly expanding our Grocery Pickup and Delivery services. Delivery Unlimited is the next step in that journey,” said Tom Ward, senior vice president, digital operations, Walmart U.S., in a statement. “By pairing our size and scale and these services we’re making Walmart the easiest place to shop. Combine that with the value we can provide, our customers can’t lose.”

Walmart uses personal shoppers to fulfill orders placed online or through its mobile app. Delivery is handled by various delivery services.

CEO Doug McMillon emphasized the importance of the chain’s stores as distribution centers during a speech at Fortune’s Brainstorm Tech conference in July.

“One of the realities of fresh and perishable food is if you don’t sell it, you throw it away or give it away,” Mr. McMillon said (via Fortune). “When you have a store environment and you have fresh or perishable food so close to people, those stores then become dual store and pick centers.”

“It’s very hard for Amazon to compete with this model on fresh produce of any kind,” wrote Chris Petersen, president of Integrated Marketing Solutions, on RetailWire. “Win the annual subscription for delivery and you win the household for much of the food cart, and the real bonus is the extras that can be delivered to expand the market basket.”

At the same time, Walmart appears to be applying lessons learned from Amazon to its own operations.

“Consumers have already shown that they are up for this kind of subscription service – Amazon Prime trained us to pay a fee for its free shipping and other services years ago,” wrote Georganne Bender, consumer anthropologist at Kizer and Bender. “It just makes sense if you are a frequent user of Walmart’s grocery delivery services.”

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Source: https://www.forbes.com/sites/retailwire/2019/09/17/walmarts-got-the-upper-hand-in-the-grocery-delivery-battle/#7baad4eb790f

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