Walmart wants to make deliveries for independent grocers

Discussion
Photo: Walmart
Feb 28, 2022

Walmart is ready to deliver for grocers across the country.

Cognetry Labs, a cloud-based artificial intelligence software platform, last week announced that it was fully integrating with Walmart GoLocal to give mid-sized and small grocers the ability to offer online delivery services on par with larger competitors.

“As an independent grocer, the need to offer our customers convenient access to online shopping and local delivery has never been more prevalent,” said Ediberto Hernandez, owner of Ideal Food Basket in Dania Beach. FL, in a press release. “By enabling delivery with Walmart GoLocal through our Cognetry Labs platform, we’ve been able to ramp grocery delivery in a matter of weeks, providing our customers with reliable delivery at an affordable price.”

“This is one way we deliver on Walmart GoLocal’s brand promise to bring affordable access to products and services to customers while also empowering businesses to grow using our capabilities and coverage,” Harsit Patel, general manager of Walmart GoLocal, said in a statement. “The fully integrated solution with Cognetry Labs plus Walmart GoLocal drives value to our customers and addresses real needs of mid-market retailers.”

Walmart launched GoLocal in August of last year. The white label service uses third-party drivers to deliver orders for businesses across the U.S. The retailer includes Home Depot, Chico’s FAS and independents among clients that use the service to make same- and next-day deliveries.

GoLocal is part of Walmart’s continuing emphasis on building its distribution strengths. A Wall Street Journal article yesterday outlined how Walmart is ramping up microwarehouses at store locations. The company plans to build around 100 in coming years.

Walmart is also expanding its Spark service that uses third-party shoppers/drivers to deliver products ordered online to customers’ doors.

The chain is using its own employees as part of its In-Home Delivery service that places orders inside the homes of customers.

The goal, according to Tom Ward, head of its U.S. e-commerce operations, is speedier deliveries.

He said that two-day deliveries are standard in retail today. “One day is pretty cool,” he said, adding that, “same-day day is really impressive and sub-same day is even more impressive.”

DISCUSSION QUESTIONS: Will mid-sized and small grocers trust Walmart to deliver online orders for them? Is same-day and sub-same day delivery about to become the standard in online grocery, even for independents?

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Braintrust
"Partnering with Walmart for online order delivery arguably makes more sense for small-to-mid-sized grocers than hooking up with Instacart."

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29 Comments on "Walmart wants to make deliveries for independent grocers"


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Lisa Goller
BrainTrust

Smaller grocers may have no choice. Omnichannel service is expensive and Walmart’s B2B delivery service can keep smaller players competitive.

Yes, more consumers have come to expect increasingly prompt delivery. Shoppers now compare retailers of all sizes to Amazon, Walmart and Instacart, as they expect speed.

Brad Halverson
Guest

Spot on, Lisa. Many smaller grocers are open to reliable and efficient alternatives to what’s available now. And going it alone, while doable, also means an investment in logistics and operations they may not be prepared for.

Key for them is maintaining a sense of ownership of their brand, messaging and data in process. Because their customer relationships are different than chain stores.

Neil Saunders
BrainTrust

Walmart has a very clear play to build out its delivery and fulfillment capacity so that it can compete more effectively with Amazon. It is logical that they look for volume from other players to help accomplish that. For those other players there are two ways of looking at this. The first is to view Walmart as a competitor and to shy away from using it. The second is to think of the benefits Walmart’s logistics can bring and to partner with it to achieve something that would be impossible for smaller retailers to build and resource on their own. More and more retailers seem to be taking the latter view, although there are plenty of alternatives like Instacart that can accomplish the same goals without the competitive overlap.

Carol Spieckerman
BrainTrust

Partnering with Walmart for online order delivery arguably makes more sense for small-to-mid-sized grocers than hooking up with Instacart. Walmart is once again monetizing its platform and driving efficiencies, yet without the creeping concerns that Instacart presents. Same-day and sub-same-day delivery are already the standards in urban centers. Plenty of established players and upstarts have ambitions to cover the burbs and rural areas. It’s only a matter of time before sub-same-day becomes table stakes.

Paula Rosenblum
BrainTrust

I like this idea. In China, Alibaba also provides software to small retailers.

I give Walmart a lot of credit for not standing pat. It would be nice to provide this to the independent retailers for sure.

Suresh Chaganti
BrainTrust

It is impractical for smaller players to invest in delivery services of their own. They need to partner with someone. And the risks of getting cannibalized are everywhere. Pure-play delivery services are now stocking products of their own. Retailers like Walmart are getting into delivery services.

These delivery partners will become competitors in no time. Independent grocers should carefully evaluate their own competitive position in the local market, their growth plans and strategize accordingly.

Jeff Sward
BrainTrust

This is terrific. Walmart is setting itself up to offer DaaS. Delivery as a service. Sure they compete with local grocers, so on that front this is a little surprising. But lots of customers are going to support local grocers for their own distinct offerings. Walmart might as well tap into that reality to give its own delivery service that much more critical mass and efficiency. And yes, the small local grocers should trust Walmart. Walmart would be crazy to put themselves in any kind of position that could portray them as some kind of behemoth corporate bad guy.

James Tenser
BrainTrust

DaaS. Wish I’d said that, Jeff!

David Spear
BrainTrust

GoLocal can be an outstanding service for independents who can’t afford or don’t have the skill sets to develop their own service models. I see several reasons why smaller retailers would want to leverage this service. The “watch out” is ownership of data and contractual rate increases, similar to Amazon’s marketplace, where retailers have experienced margin erosion over time. If GoLocal acts in a similar manner and the value prop becomes less exciting, then independents will vote with their feet. In terms of grocery delivery, same-day is the standard. Fifteen minute or within an hour puts a lot of stress on operations, not to mention calls into question the entire profitability equation.

Dion Kenney
BrainTrust
7 months 8 days ago

With the current focus in retail competition so heavily skewed to the “online vs in-store” dimension, it is easy to forget that Walmart’s most powerful competitive tool in besting other department stores was in advanced logistics, inventory management, and shipping. Today they may be best known for low pricing, but their product moving infrastructure – distribution centers, trucks, and software – has advantages that many competitors still can’t match.

If anyone can leverage “local delivery” as an innovative and effective competitive advantage, I’d put my money on the team from Bentonville. Will other stores trust them? Well, that may take a little more effort on their part.

Brian Delp
BrainTrust
7 months 8 days ago

This is a great concept. It allows for Walmart to build its logistics while also allowing small businesses to succeed. Hopefully it is a win-win. Small businesses are already trusting major marketplace players like Amazon and Walmart to sell their goods, and in some cases distribute from their warehouses. This is the next progression and will quickly become the standard. I expect others to follow and for this to begin to compete with other delivery order services like Seamless and Uber Eats.

Gene Detroyer
BrainTrust

Critical mass is key to delivery services. Increasing volume while minimizing overhead expenses build the bottom line. There is no doubt in my mind that small and mid-size retailers will not be able to match the cost or efficiency of large delivery operations (See Amazon).

I still don’t understand why anyone needs same-day or sub-same day. But if there is a true desire, I suppose it should be offered. To that point however, in NYC there is a bill in the City Council to ban 15-minute delivery. The reason: safety of the delivery workers and safety of pedestrians.

Gary Sankary
BrainTrust

Home delivery is becoming a critical capability for every grocer. For small and medium-sized companies, standing up this kind of service just isn’t practical. Working with Walmart gives them the opportunity to offer these services to their customers, and to do so quickly and at scale. I don’t know that delivery has become table stakes for grocers, but it’s certainly a major differentiator at this point. So the faster they can do this, the better.
I would offer a warning: this buys these companies time to develop the tools to do this. They should use that time to develop a backup plan to provide these services should Walmart decide to no longer support this in future.

Ken Morris
BrainTrust

I don’t doubt that some will trust Walmart, but giving up customer information to a competitor is retail suicide. Many will take advantage of the GoLocal option. After all, fast deliveries have become the most important ask for customers. Same-day delivery will become the new norm. But how will these grocers protect their customers’ identity and shopping histories?

This move will mean more data inputs for Walmart to ingest and learn how to dominate local markets even better. Yes, their commitment to building over a hundred MFCs should signal to all retailers that that’s the way to go. But will there be enough drivers? Today, the answer for almost everyone is no. That’s why both Walmart and local grocers are willing to throw in together. For now.

Georganne Bender
BrainTrust

I worked for the company that had once counted Sam Walton as one of its franchisees. The execs at the time laughed at Sam’s idea to open Walmart stores but they stopped laughing when Walmart began to deeply affect other franchisees.

I like this idea. I like it because it levels the playing field for independent grocers by helping them to provide their customers with the same services as the big guys. I know it’s business, but on a personal level, it just feels good to see Walmart offering services to help independent retailers.

Matt Lyles
Guest

Consumers expect same-day, and even sub-same day, delivery for online grocery delivery no matter the size of the store. If mid-sized and small grocers want to step up to meet consumer expectations, they’ll need to partner with a third party that has the infrastructure and capabilities to offer this. Walmart currently makes sense.

At the same time, these mid-sized and small grocers should consider what they can do to ramp up their infrastructure to own this delivery service in the future.

Steve Montgomery
BrainTrust

Smaller local grocery retailers face a dilemma. Their customers have their own or third-party delivery options and some of the third parties are now becoming competitors. The question comes down to cost and who will be the least likely to use the information they gain about your company to pirate your customers.

Walmart has for many years been considered the nemesis of local retailers. It would be foolish of them to offer this service and then work to steal the business from their delivery service customers. The negative publicity would be severe.

Shep Hyken
BrainTrust

Just as Amazon has their marketplace, why can’t Walmart do the same for the independent grocers? This could be a great opportunity for both sides. There does have to be a certain level of trust. I don’t believe Walmart would do anything improper with the data/information they pick up on the the grocers’ customers. If they did, it would have serious implications for Walmart’s future in partnering with other retailers and vendors. You have to trust who you do business with.

Richard J. George, Ph.D.
BrainTrust

Terrific move by Walmart to enhance its local connections. For an independent retailer, this provides an alternative to building your own system (expensive) or partnering with Instacart. For Walmart, more arrows in its quiver to fight Amazon.

Ananda Chakravarty
BrainTrust

Walmart is entering the Instacart/DoorDash/Shipt arena by offering the GoLocal services. More importantly, Walmart will deliver on time and effectively to the extent their logistics network allows – otherwise the business model will fall apart. For localized data it may be helpful to Walmart, but this is not like figuring out what the smaller competitors sell and undercutting prices, this is about creating a continued relationship in a business ecosystem and more about undercutting other delivery operations.

Same-day and sub-same-day are becoming more popular and, of these, same-day is important for grocery – but online volumes haven’t reached the tipping point to make it profitable yet. The need for same-day won’t be the deciding factor. Two-day and next-day delivery still reign.

Lucille DeHart
BrainTrust

This is a genius move by Walmart, especially if they allow for add-on purchases from their own (non-grocery) assortment. Walmart’s quest to out-retail Amazon is on pace and the more they leverage their overwhelming store base, the more competitive they will become. Standalone grocers should work with Walmart–they already have the infrastructure and trust of the population. While it is odd that they are offering a service that competes with their own assortment, it may be a glimpse into the mega-retailer’s future.

Joan Treistman
BrainTrust

If customers don’t see the Walmart name associated with the mid and small grocery delivery service, then retailers will trust Walmart and enjoy the benefits along with their customers. I understand the concern of Walmart having access to their competitors’ databases of customers, but they probably already do and beyond that have overlapping clientele.

Ricardo Belmar
BrainTrust

A smart move by Walmart to further monetize their best logistics network. For the independent grocer, the choice to offer same-day delivery to customers comes down to Walmart GoLocal, Instacart or a Doordash/Shipt alternative. The question is, which do you trust with your customer? Ultimately, the grocer is not only trying to satisfy their customer, but they’re also enabling a potential competitor. It’s a difficult choice, but one these retailers will have to make as customer demand for these services continues to grow.

Andrew Blatherwick
BrainTrust

Walmart is getting ever closer to offering the same services as Amazon. As with Amazon, a lot depends on who owns the customer and gets the customer’s data and analytics. If Walmart can offer smaller retailers the opportunity to use their service and provide customer data, then they could be in a position to build a real distribution service. They clearly have the volumes and scale to deliver this service nationwide, as a white label service it also removes the brand conflicts.

James Tenser
BrainTrust

Walmart’s GoLocal ride-along deliveries should not just be for indy grocers. What about neighborhood dry cleaners, hardware stores, pharmacies? It should not matter that those clients have a degree of competitive overlap with the Walmart assortment. This is marketplace thinking.

Properly implemented at scale, GoLocal can make the very cost-effective transition from high-cost “taxi-cab” deliveries to economical “bus-route” deliveries. When full vans can pass through every neighborhood twice a day, every retailer on the route benefits. Shoppers get 12 to 24 hour service. Walmart matches Amazon’s promise.

The RW faithful may recall we touched on this subject of “common carrier” delivery by grocers earlier this month.

Today, Jeff Sward labeled this concept DaaS – “Delivery as a Service.” This may be one of Walmart’s best moves yet.

Brad Halverson
Guest
Walmart has an opportunity here. For a smaller grocer, one of the most repeated and biggest frustrations in partnering with Instacart is losing the customer connection customer. An example story I know of is from a two store owner who wanted to personally thank the customer for ordering thousands of dollars of food, flowers and champagne. Not only were they blocked from seeing the order data and customer information, but they weren’t allowed to pass on any communication back to that customer. For a small grocer, these connections are part of what make them authentic, different, and special in the communities they serve. Walmart would be wise to play nicely when offering their platform to these small operators if they want to earn their business long-term. Could be a real game changer that way. Data access is another topic which smaller grocers will have to weigh carefully and ask, “Which platform would most likely use my data to take away shoppers or marketshare by either offering my unique products, building a new sales channel over… Read more »
Kai Clarke
BrainTrust

Yes, yes and yes. Walmart is simply imitating a tried and true program that Amazon has been doing for years (Fulfillment by Amazon) FBA, with their spin on it. This gives independent grocers a better chance to compete online, with true rapid fulfillment and delivering their products rapidly. Independent grocers need to compete and this gives them a great solution!