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Will Late-Night Delivery Pay Off for Walmart?
Extending the potential to service “last-minute needs,” Walmart is now offering late-night Express Delivery until 10 p.m. for orders placed by 9:30 p.m. Previously, the retailer provided delivery until 8 p.m.
“We’ve all been there,” said Tom Ward, EVP and chief e-commerce officer for Walmart U.S., in the announcement. “The workday is finally finished, dinner and the dishes are done, when suddenly it hits you: You don’t have a gift for tomorrow’s party, cookies for the school fundraiser, or, the ultimate nightmare, you’ve run out of your favorite coffee pods. And the clock won’t quit ticking.”
The blog entry offered several other examples where home delivery by 10 p.m. would be welcome, including running low on diapers or replacing a kid’s broken game controller. For morning planning, late-night emergency purchases may include “your kids’ favorite brand of gummy vitamins they grab on their way to the bus, or a broken hairdryer,” wrote Ward. On a trip, a forgotten phone charger might be a desperate evening purchase.
Ward highlighted, “This is about more than just staying up late – it’s about building a suite of Pickup and Delivery options that prioritize convenience, speed and putting the customer at the very center.”
Walmart’s late-night delivery doesn’t come cheap. For Express Deliveries (guaranteed between 30 minutes to 90 minutes), Walmart charges $10 plus standard delivery fees (ranging from $7.95 to $9.95.) I waive standard delivery fees for Walmart+ members.
Walmart’s late-night competition includes Instacart, which reportedly delivers until 7 or 8 p.m. for most grocery partners but has offered 24/7 delivery since 2021 from stores open all the time, such as 7-Eleven, Walgreens, and CVS.
Other retailers offering same-day delivery generally require consumers to order by early afternoon, although the fees tend to be less. Macy’s, for instance, requires orders to be placed by noon for delivery between 3 and 6 p.m. Best Buy requires orders by 3 p.m. for orders delivered by 9 p.m.
Amazon promises “ultrafast 2-hour grocery delivery” from Amazon Fresh and Whole Foods in select regions for a fee as well as free Prime delivery in “as fast as 5 hours” from Amazon.com.
In late July, Amazon announced plans to double the number of U.S. regions offering same-day delivery from Amazon.com in “coming years” while disclosing that more than half of all orders placed by Prime subscribers in the 60 largest metropolitan areas during the first quarter arrived the same or next day.
Discussion Questions
Will offering late-night Express Delivery provide enough of a benefit to Walmart to offset execution challenges? Do you see Amazon, delivery platforms such as Instacart, or any other retailers emerging as big competitors for late-night deliveries?
Poll
Loading …BrainTrust
Jeff Sward
Founding Partner, Merchandising Metrics
David Slavick
Co-Founder & Partner, Ascendant Loyalty
While the demand for late night delivery is not widespread, there are occasions when people urgently need groceries and there are groups of consumers whose working hours necessitate deliveries at later hours. Walmart is catering to them and, in so doing, it is adding another service which it can drive from its stores. This along with Express Delivery and the new Live Shopper feature is helping to burnish Walmart’s convenience credentials as it battles with Amazon.
No one doubts the benefit to the consumer of keeping late delivery hours. The question is: ‘Can Walmart make this service work financially?’ Associates have to paid for at least two hours of work at every participating location. This may be something that Walmart either has already tested or will be testing to determine if the demand for this service plus the service charge and the associated revenue outweigh the cost of the operation. If it doesn’t, Walmart will adjust the schedules, or the service charge, again.
I’d be shocked if the math says that this will be a profitable tactic in and of itself, even with the hefty fees. But it’s absolutely a competitive differentiator against Amazon. So as a tactic to peel sales away from Amazon, it becomes a loyalty issue and the customer turns to Walmart more often as the go-to retailer for everyday needs.
Walmart’s late deliveries offer consumers solutions, as life gets busier with school and the return to the office. Consumers will certainly use this service throughout the holiday season.
Amazon, Instacart and Target could match late-night deliveries to satisfy consumers.
I’ve written about quick commerce (deliveries in less than 1 hour) many times stating the immense operational & profitability challenges it faces. Late night express delivery falls into this same category. That said, as Walmart trials this around the country, it will figure out where this service makes sense. As the results come in, they might find it only works in select, densely populated urban centers. Kudo’s to Walmart for pushing the envelope. They’ll learn a lot.
I love this. I think it would be even smarter to make it later than 10pm though, and I’d especially focus on offering this in college markets.
Retailers too often add these kinds of services which neither pay back nor offer strategic advantage. My guess, though, is that this was created based on the idea it is a strategic advantage. As Shahin Khan observed in our most recent podcast, a strategic sale is the one we give away for free. Walmart seems to be following a similar idea to its own discredit.
Walmart has been killing it in the curbside and delivery space for a long time. I don’t think these late-night deliveries will be a significant part of Walmart’s deliveries, I do think it’s yet another differentiator that will incent customers think of Walmart first when they need something.
First I need to decide to become a Walmart shopper. Then, I need to decide if what they offer is what I’m interested in. It is of course all about convenience but at the same time (and this likely doesn’t apply to their loyal customer base) I’m not all that favorable to more carbon emissions to support late night delivery vs. waiting til the next day when loyal Walmart shopper can fill their checklist along with other errands needed to be completed that day.
Just when we thought – hoped? – sanity was
returningcoming to home delivery…As with any delivery model, the problem isn’t whether “someone” wants it, it’s whether that someone – or ones…hopefully – is willing to pay for it. I say no; at least not enough for what seems like a marginal idea to be worthwhile.
No doubt a market differentiator that will require competitive responses. Walmart with Walmart+ has aggressively pursued changing the consumer needs, that mandate enhancements to “last mile” component of grocery shopping.
If Walmart starts to deliver prepared food on late-night runs, then, they might be on to something.
Otherwise, while there will always be late night moments of a forgotten this or that, this is one time where I’m not sure the juice is worth the squeeze for Walmart.
Also, something about Walmart showing up at your front door at 10 or 11pm just doesn’t feel very on brand for America’s family store.
This is a nice test & learn concept. The who, what, when, & where of the workforce is what I am most interested in as they build & scale the service. I did not see if they were using W2 employees, similar to Walmart Inhome, that are full vetted & onboarded through internal Walmart HR systems or if they using are 3rd Party contractors, via the Delivery Drivers Inc acquisition, or even a gig option like what you see at Shipt. The gig option would appear to be too unreliable to crowd source the proper workforce at that time of night, the W2 employees would be the best option but drivers are still hard to come by in 2023. If they can get the labor/drivers matched to the demand this could be a viable service in large population centers. Most retailers I have worked with that offer same day delivery, not late night but same day, in large population centers end up using Dolly or GoShare because of the workforce challenges in tight windows.