In power move, Walmart expands Delivery Unlimited

Discussion
Photo: Walmart
Sep 12, 2019
George Anderson

Walmart announced today 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 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.”

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

Walmart 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.” 

In addition to 1,600 stores that make home deliveries, Walmart offers grocery pickup at 3,100 locations across the country.

With its Delivery Unlimited plan, Walmart competes directly with Target, which offers same-day deliveries on groceries and other items from Shipt for an annual fee of $99. Amazon also offers same-day delivery to its Prime members ($119 annual fee) from Whole Foods’ locations around the country.

DISCUSSION QUESTIONS: What will Delivery Unlimited mean for Walmart’s grocery business? Will Walmart’s offer draw grocery customers away from Amazon, Target and regional grocers?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"This is a no-brainer. If you deliver groceries this should be part of your service offerings."
"Brilliant move to leverage Walmart’s installed store base strengths. It’s very hard for Amazon to compete with this model on fresh produce of any kind."
"Store design will continue to evolve, but for Walmart to roll this out so broadly they must have seen performance that really resonated."

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15 Comments on "In power move, Walmart expands Delivery Unlimited"


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Chris Petersen, PhD.
BrainTrust

Brilliant move to leverage Walmart’s installed store base strengths. It’s very hard for Amazon to compete with this model on fresh produce of any kind. 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.

Neil Saunders
BrainTrust

This is a smart move that locks in loyalty from consumers. Ocado did something similar in the U.K. years ago and they found that customers on the subscription scheme spent more and were less likely to defect to other retailers. The slight downside is that the cost of the scheme does not always cover the cost of delivery for high intensity users, although this is partly balanced by greater profitability from low intensity users. There is also the problem of ensuring that enough delivery slots are available for these subscription users at peak times like Thanksgiving or Christmas; this was a major source of frustration with Ocado subscribers.

Michael La Kier
BrainTrust

Build it and they will come; make it easy and they will keep coming. Walmart’s stores offer an advantage for fresh delivery (a key reason Amazon bought Whole Foods) and with their larger customer base, rolling out this service will be a boon to their business and take away from others. Convenience is the name of the game going forward — the question will be at what price for customers (and if the cost works for Walmart, given the “unlimited” aspect).

Jeff Sward
BrainTrust

Very smart move. Capture the customer based on perishables and they tack on their non-perishable purchases to boot. This is not just an Amazon strategy. Any other local grocery store better take notice also.

Ken Morris
BrainTrust

I think this will be a definite plus for their grocery business but the price may be steep for the Walmart shopper. With 90 percent of the U.S. population living within a 10 mile radius of a Walmart location they have the opportunity to grab a big chunk of market share. They will need to increase their organic and healthy selections to compete as Whole Foods and regional juggernauts like Publix aren’t standing still. I believe if they upgraded their selection and offered lower and or one-time options they could take a big portion of what will be a huge market.

Georganne Bender
BrainTrust

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. And it just makes sense if you are a frequent user of Walmart’s grocery delivery services. This is a no-brainer. If you deliver groceries this should be part of your service offerings.

Richard J. George, Ph.D.
BrainTrust

Kudos to Walmart for their latest attempt to catch up to Amazon and potentially leapfrog over Target. However, with the exception of its scale of coverage, it adds little in way of a real point of differentiation. Perhaps fresh will make a difference. It will be interesting to follow its customers in terms of using this new service versus BOPIS, which appears to have some traction with its customer base.

Mark Heckman
BrainTrust

I concur with the other panelist who applaud this move. While Walmart has been very aggressive with its BOPIS operations, they have been lagging behind in home delivery. This news changes that and is a significant step forward, as it also provides an additional advantage to Walmart over Amazon in the grocery delivery business given that Walmart is much more mainstream with its grocery offerings and pricing than the combination of Amazon and Whole Foods. I remain convinced, however, that Amazon will continue to dominate Walmart in most other online categories beyond grocery. Perhaps this dichotomy of each having a dominant niche will be the basis for a strong retailing duopoly for years to come.

Kai Clarke
BrainTrust

Welcome to the great world of subscription revenues, Walmart! 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. Increased profits, more on-time deliveries, and happier customers. This empowers the store to conduct better forecasting, minimize out-of-stocks, and create an entirely new audience. What is there not to like?

Lee Peterson
BrainTrust

Preemptive strike. Nice. You have to give it to Walmart, they’re starting to actually beat Amazon (and traditional grocers) to the punch. And 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). The game here is market share, first to market, so to me it is a BIG win.

Stephen Rector
BrainTrust

This makes total sense to maximize perishable inventories in Walmart’s fleet of stores – but I am still not sure how it will effect the others. I still believe that if a consumer has the choice, they would go with Target, Whole Foods or a regional grocer over Walmart. In most instances, a consumer is going to get a more diverse selection from one of the others, particularly in the fresh produce department which is the biggest opportunity for them to differentiate – expanded assortment and better quality.

Josh Clouser
Guest

The more a company can excite loyalty, the more it will prosper. Walmart’s move to offer a highly competitive service is strong. In the long run, Walmart will not be looking at the service fee as a broad money maker, the cost to deliver will likely exceed that of the service fee. What Walmart builds on is an already loyal base and offer a new segment of grocery consumers access to familiar goods/produce.

There is a large portion of America who does not shop at “boutique” grocery chains like Whole Foods and New Seasons. Walmart gets to now tap into their expansive territory and demographic which could expand their loyal base.

Craig Sundstrom
Guest

Another experiment, to be promoted and then forgotten? We’re perfectly divided on this issue — per the instant poll — but I’m still perfectly UN-divided on how I feel about online grocery (and its cousin, “delivery”): it’s a classic loss-leader. Or let me rephrase that: it’s a classic case of blind imitation … a “we-gotta-do-this-cuz-everyone-else-does-too.”

At least Walmart is avoiding the quicksand of “free” but unfortunately, their customer base is also the least likely to want or be able to pay. For those who can’t or won’t do the math, even with WM’s poverty wages, $12.95 will probably cover half the cost of a delivery. Making the numbers work with “unlimited” is a task Houdini would have passed on.

Sterling Hawkins
BrainTrust

It’s great to finally see a full resurgence of the physical store. We’ve specifically been putting stores around people that buy things for the better part of 100 years. Why not use them most effectively? Store design will continue to evolve, but for Walmart to roll this out so broadly they must have seen performance that really resonated. I don’t know if it’s going to draw customers from competitors, but it does open up the opportunity to their entire customer base so more people (perhaps not formally doing much ordering online) will take part.

Joel Goldstein
BrainTrust

This is the way the world is moving. I would imagine that right now they are trying to compete day to day with regional supermarkets and Amazon. However once automation takes hold no matter if that means drones or autonomous delivery cars, Walmart’s low prices and fast service will be able to give Amazon a run for their money…

wpDiscuz
Braintrust
"This is a no-brainer. If you deliver groceries this should be part of your service offerings."
"Brilliant move to leverage Walmart’s installed store base strengths. It’s very hard for Amazon to compete with this model on fresh produce of any kind."
"Store design will continue to evolve, but for Walmart to roll this out so broadly they must have seen performance that really resonated."

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