Will Walmart’s customers pay $10 more to get deliveries in two hours?

Discussion
Photo: Walmart
May 04, 2020
Tom Ryan

Walmart last week said it was rolling out Express Delivery for “more than 160,000 items” across groceries, general merchandise, electronics and toys categories within two hours for $10.

Similar to Walmart’s other delivery options, the order has to exceed $30. Walmart accelerated the rollout in response to the coronavirus pandemic.

“We know our customers’ lives have changed during this pandemic, and so has the way they shop,” said Janey Whiteside, chief customer officer, Walmart, in a statement. “We also know when we come out of this, customers will be busier than ever, and sometimes that will call for needing supplies in a hurry.”

The service has been piloted in 100 stores since mid-April and will be available in nearly 2,000 in coming weeks. According to Techcrunch, deliveries on average arrived within 56 minutes during the pilot.

Walmart’s 74,000 personal shoppers plus specific hires for Express Delivery will pick orders, and existing third-party providers will handle delivery. The $10 fee comes on top of existing delivery charges that typically range between $7.95 to $9.95.

Walmart is introducing the service at a time when the surge in grocery delivery amid COVID-19 has led to delays and even scarcity of delivery time slots in hard-hit areas such as New York City. Food delivery services like Instacart are hiring hundreds of thousands of workers to meet the unprecedented demand.

Express Delivery, which was in development before the pandemic, is seen as an alternative to Amazon’s Prime Now, which launched in 2014 and offers two-hour delivery for Prime members in select U.S. cities. In 2018, Amazon added delivery from Whole Foods. Amazon offers free delivery on orders above $35, with a $5 delivery fee for those below that threshold.

Last June, Walmart introduced Delivery Unlimited, which charges $12.95 monthly or $98 annually for unlimited same-day grocery delivery. Delivery Unlimited customers would still pay the $10 fee for Express Delivery that covers more items. In February, reports arrived that Walmart was developing a new annual subscription plan, Walmart+, that would rebrand Delivery Unlimited and offer perks such as discounts on prescription medicines and fuel, as well as in-store Scan & Go.

DISCUSSION QUESTIONS: Will Express Delivery offer much appeal to Walmart’s customers during and after the pandemic? How do you see it complementing Walmart’s other online options and matching up against Prime Now?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"People may be willing to pay it during this pandemic but once it is over so may be this service."
"Would people pay $10 to get grocery delivery in 2 hours? I’m setting up a Walmart account immediately after I write this post, now that I know that this service exists!"
"There is the old formula: price is clearly related to value. If a customer wants and needs a premium service for whatever reason, it’s their definition that counts."

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19 Comments on "Will Walmart’s customers pay $10 more to get deliveries in two hours?"


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Neil Saunders
BrainTrust

There are a lot of costs associated with the fulfillment of online grocery and for quick shipping, those costs are even higher. As such, Walmart is right to make this a “premium” service for which a premium is charged. It almost certainly will appeal to those who need urgent delivery and who have the budget to pay for it. The whole point, however, is that options are provided: it’s a good/better/best model where you pick the type of delivery or service you need and pay for it accordingly.

Suresh Chaganti
BrainTrust

It is certainly a steep convenience up-charge. But it is impressive that it scaled rapidly from 100 stores to 2,000 stores in just few weeks. A good portion of it is probably pandemic related constraints encouraging shoppers to seek delivery service. I expect demand for this to stabilize after the initial uptick.

Richard Hernandez
BrainTrust

I do not know if this will be as popular as people think but it’s Walmart’s prerogative to offer the service. Most of the public is strapped for cash right now and some will pay the regular fee or do pickup, but I do not think this will be a widespread success – at least not right now.

Jeff Weidauer
BrainTrust

Adding an express option makes sense, and it’s a must-have to counter Amazon, even though it isn’t likely to become more than a niche play. Walmart’s challenge will be to clearly communicate the various delivery options it offers going forward so customers understand what makes sense for any given purchase.

Dave Bruno
BrainTrust

This offer has a much higher value during the crisis than in more normal times. As someone who has converted to 100 percent online/delivery grocery shopping these past two months, the sooner one know what they will actually receive from their orders (versus things that are out of stock), the sooner one can adjust meal plans and, more importantly, other orders. Overcoming out-of-stocks is a bit of a cat-and-mouse game, and we always have two or three orders from different retailers in play so we can adapt and adjust as we find out what we will actually receive from each order. After the crisis recedes, I am skeptical that the $10 fee will be popular, but right now it seem like a good idea.

Shawn Harris
BrainTrust

$10 as a premium charge for less than two hour delivery is steep; I do understand it’s costly to execute on these services. I’d imagine that the fee could represent over 100 percent of the item(s) price, as you are not last minute bulk shopping. So the intent here is to drive people to just go to the store and pick it up, as the friction of $10 will be an untenable cost for most customers.

Ryan Mathews
BrainTrust

Whether or not this will work depends on two critical factors: how badly people need the items and whether the items that they need consistently available. If they don’t need them immediately $10 may look like profiteering. If Walmart can’t supply critical items on a consistent basis, it’s hard to justify the upcharge on the rest of the order. Now of course, everyone’s list of critical items is somewhat different which makes the problem all the more complex. I see the potential for alignment with existing offers, but I also see a danger that it will have the reverse effect. The devil, as always, is in the execution.

Steve Montgomery
BrainTrust

Walmart was built on having a lower retail price for its merchandise. Having a delivery cost that will range from a total of $17.95 to $19.95 seems outside that model. People may be willing to pay it during this pandemic but once it is over so may be this service.

Ricardo Belmar
BrainTrust

I am not sure the typical value-based Walmart shopper is willing to pay an extra $10 for express delivery. Perhaps Walmart is trying to entice a new demographic of shopper that is willing to pay this steep convenience cost, but I expect most shoppers are not looking for more expenses during the pandemic when so many are worried about their financial future. While impressive that they are able to scale this service so quickly, I wonder if the timing is a bit tone-deaf during a pandemic and whether it is solving a problem Walmart customers didn’t know they had.

Mohamed Amer
BrainTrust

I applaud Walmart’s ability to offer the Express option at a flat rate that is only a couple of dollars more than its regular delivery fee. The pandemic certainly accelerated the service and rollout. There will be some tweaks to work out, such as item availability being confirmed at checkout and not at selection, but overall it’s impressive how quickly the company went from pilot to rollout.

There’s a downside though to this option and it highlights the gap between those that can afford it versus others for which the fee is prohibitive. With high unemployment and uncertainty, those that are more economically well-off will be able to take advantage of this service which offers convenience while mitigating the spread of the virus.

Brandon Rael
BrainTrust

The race to mitigate the last mile has picked up and the winners in this scenario are companies that have the scale, resources, infrastructure, capabilities, and are agile enough to meet the increasing consumer demands. Walmart has every right to offer this premium delivery service, and it gives consumers another choice if and when they need immediate delivery, especially when Instacart windows are filling up so quickly.

Most Walmart customers will continue to go to the stores. However, this may appeal to customers who are seeking more immediate delivery windows and have run out of options.

Camille P. Schuster, PhD.
BrainTrust

Adding $10 for express delivery is a step away from low prices for Walmart. Right now some people are ordering from Walmart rather than Amazon if prices are lower. An extra fee might make customers do more comparison shopping. If Amazon has a slightly higher price on an item but the difference is less than $10 and the delivery window is acceptable, it will give customers a reason to not choose Walmart. It will be interesting to see the response of customers, especially those customers who have already paid a yearly fee for delivery.

Rich Kizer
BrainTrust

There is the old formula: price is clearly related to value. If a customer wants and needs a premium service for whatever reason, it’s their definition that counts. Some want top of the line, some don’t. A good business knows how to fill a need. Right on, Walmart!

Ed Rosenbaum
BrainTrust

Interesting. My initial and consistent thought is no way am I spending an extra $10 dollars to get a delivery within two hours. Mind you that this is being written by a person whose tire pressure was low and had to spend $1.50 to get air. In this case I was being taken but had no choice. The air pressure machine did not care if I used it or not. Neither did the station attendant who would rather sell lottery tickets. Going back to the question: it has to be quite important to spend that kind of money, which eliminated anything you may have saved, to get a delivery in two hours.

Shikha Jain
BrainTrust

Consumers aren’t just “popping into the grocery store” anymore, they are planning their trips during the pandemic and buying in bulk. This trend is likely to continue somewhat as people incorporate habits gained during the pandemic into their “new” lives afterward especially if grocery/department stores follow rules about reduced capacity and social distancing. It is also no surprise that there is a whole segment of loyal Walmart shoppers who have that extra willingness-to-pay for premium service. Now is probably the time to think about additional premium features both that mirror Amazon Prime (example, same-day delivery) and are novel (example, exclusive access to select inventory, deeper discounts) to continue to build shopper loyalty.

Kathy Kimple
BrainTrust

Walmart is one of several merchants who are introducing or expanding same-day delivery to better compete with Amazon and Prime, with similar annual fees. Many are offering free 30-day trials, and while I see consumers taking advantage of these offers, whether they are willing to pay the annual fee is going to depend on how well the services perform during this tryout period, and whether shopping for groceries remains a hassle into the summer and fall.

Craig Sundstrom
Guest

In answering this question, I find myself swimming thru a sea of preconceptions:

  • Everyone has plenty of time on their hands right now;
  • Walmart customers value saving dollar$ over minutes;
  • Free/low cost delivery is inherently money losing.

Maybe not every one of these is true, but I think at least one of them is … I don’t see this being a big part of WM’s future.

Jasmine Glasheen
BrainTrust

Would people pay $10 to get grocery delivery in 2 hours? I’m setting up a Walmart account immediately after I write this post, now that I know that this service exists!

Instacart in San Diego has a 5 day wait and Grubhub adds around $20 in hidden fees along the way (plus it’s just restaurant food, not groceries). This is a great competitive differentiator.

Joel Goldstein
BrainTrust

With Walmart competing heavily on prices with Amazon and offering more convenient options with their curbside pickup, I believe that more affluent Americans would see the benefits of express delivery as the express option program has been doing well for the grocery delivery apps. The challenge ahead of Walmart is removing the stigma of low prices = low quality and pulling traction away from the shoppers who instinctively pull up the Amazon app when looking for a product.

wpDiscuz
Braintrust
"People may be willing to pay it during this pandemic but once it is over so may be this service."
"Would people pay $10 to get grocery delivery in 2 hours? I’m setting up a Walmart account immediately after I write this post, now that I know that this service exists!"
"There is the old formula: price is clearly related to value. If a customer wants and needs a premium service for whatever reason, it’s their definition that counts."

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