Walmart-Amazon Rivalry Turns Into Food Fight

Walmart on Wednesday said it would expand its Online Grocery Delivery service, currently available in six markets, to more than 100 metro areas across the United States. Its plans call for covering more than 40 percent of U.S. households by the end of the year.

Walmart will use more than 800 of its stores to fulfill orders, and it will add thousands of personal shoppers to the more than 18,000 already employed. The shoppers have to undergo a three-week training program on food selection.

Walmart’s Online Grocery Delivery service offers same-day delivery. The minimum order is US$30, and there’s a $9.95 delivery fee. There are no price markups and no subscription requirements.

“With the help of our personal shoppers and third-party delivery services, customers can have quality groceries delivered right to their doorstep,” said Walmart spokesperson Molly Blakeman.

Walmart has been working with third parties such as Uber and Deliv, which it will add to its lineup soon, she told the E-Commerce Times.

Throughout the coming year, Walmart will add another 1,000 stores offering its Online Grocery Pickup service to the 1,200 already offering it.

Worth a Ten-Spot

In some respects, Walmart’s fee structure gives it a competitive edge, said Ray Wang, principal analyst at Constellation Research.

“No markup, reasonable minimum, $10 service charge — more like the Uber Eats business model,” he told the E-Commerce Times. “People are willing to spend the $10 instead of spending 30 to 60 minutes to find everything they want.”

However, Walmart’s $9.95 fee and $30 minimum will face serious challengers.

Its major competition will come “from a few models,” Wang observed. “Target is the big one, but we’ll also see intermediary delivery networks like Instacart and Google Express, grocery chains like Safeway and Aldi, and of course Amazon and Whole Foods.”

Instacart Express, for example, reportedly offers a $5.99 one-hour delivery program for orders of $35 or more from a number of stores and chains. The minimum for a delivery order is $10.

Google Express reportedly charges $10 a month or $95 a year for membership in a program that provides free delivery on eligible orders or charges a $3 small-order fee. Non-members pay $4.99 per delivery. Google Express also delivers from Target and Costco.

Costco has no minimum for delivery, but charges a fee for orders under $35.

Walmart has a better reach than Amazon in terms of brick-and-mortar stores, but it needs to build up its delivery infrastructure, Wang noted. Safeway is the grocery store chain with the most advanced model, and Google Express is the delivery service driving innovations.

Walmart’s Bumpy Road

“Walmart’s move into grocery delivery is a clear sign of the competitiveness in the grocery category, which has seen tremendous growth in the past year,” said Karin Borchert, CEO of 1WorldSync.

It “also showcases [Walmart’s] expanding delivery ambitions as it moves to compete more heavily in e-commerce and sync with the way consumers shop,” she told the E-Commerce Times

However, the path won’t be smooth.

“Quality, freshness and ripeness are factors consumers traditionally have control over when shopping in brick-and-mortar stores, but this is not the case when purchasing groceries online,” Borchert noted. “Walmart will need to find a way to ensure their product information is trusted and accurate … to be successful with this new endeavor.”

Richard Adhikari

Richard Adhikari has been an ECT News Network reporter since 2008. His areas of focus include cybersecurity, mobile technologies, CRM, databases, software development, mainframe and mid-range computing, and application development. He has written and edited for numerous publications, including Information Week and Computerworld. He is the author of two books on client/server technology. Email Richard.

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