Walmart and Amazon have been neck-in-neck in the grocery retail race, but the former might have just played its wild card. This week, Walmart revealed that it is adding a new perk to its grocery delivery services to complement its same-day delivery option; the retailer announced it is adding free NextDay delivery for all shoppers, no membership fee required—which could be a direct hit to Amazon’s own membership-required one-day Prime delivery service—and the industry is shook.
“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,” said Marc Lore, President and CEO of Walmart E-Commerce U.S., in a press release. “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.”
Currently, NextDay delivery, which includes up to 220,000 Walmart items and is available on eligible orders of $35 or more, is only offered to shoppers in Phoenix and Las Vegas. The retailer did disclose, however, that it does plan to roll out this delivery service to more cities in the coming months, ultimately reaching approximately 75 percent of the U.S. population in 2019 and 40 of the top 50 major U.S. metro areas.
News source MarketWatch believes that, despite Walmart’s assertion, this move on Walmart's behalf is not without major costs of up to $215 million. Analysts ascertained, based on Walmart’s online sales, that matching Amazon’s one-day shipping will force Walmart to make incremental investments—investments that will ultimately “win over the long term” since analysts believe Walmart has “enough infrastructure in place to keep the impact quite manageable.”
Walmart, however, refuted analysts and said its new delivery option will help costs, rather than hinder them.
Lore added: “We can offer fast, convenient shipping options because we’ve built a network of fulfillment assets that are strategically located across the U.S. 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.”
Will Amazon hit Walmart back with an unforeseen move? And will Walmart’s new NextDay delivery actually help it pull off a big win over one of its biggest competitors?
Deli Market News will continue to report with updates.