Walmart takes on Amazon in next-day delivery contest
Walmart is piloting its own next-day delivery service — but with a competitive twist.
The discount titan is expanding its existing same-day grocery pickup and delivery service by launching free next-day delivery for purchases of $35 or more across a range of general merchandise from Walmart.com. Unlike Amazon’s planned rollout of standard next-day shipping for all Prime purchases, however, Walmart’s one-day online delivery option does not require a membership fee.
Next-day delivery will be available first to Walmart.com customers in Phoenix and Las Vegas, and will expand to Southern California in the coming days. Walmart plans to gradually roll out the service over the coming months to reach approximately 75% of the U.S. population this year, including 40 of the top 50 major U.S. metro areas.
Walmart is initially offering next day delivery on 220,000 of the most frequently purchased products online, ranging from diapers and laundry detergent to toys and electronics, with more assortment to be added. Specific assortment of eligible items will vary by customer location.
“When customers shop with us, they expect to find great items at low prices,” Marc Lore, president and CEO of Walmart E-commerce US, said in a corporate blog post announcing the new service. “They also want shopping to be easy and convenient, including getting the items they order online quickly. Our 4,700 stores, site and app combine to create an incredible range of choices for customers.”
To have an online purchase delivered the next day, a customer visits Walmart.com and toggles into the next day delivery section of the site to view items that are eligible for free next day delivery. After adding items to their cart, the customer proceeds to checkout. Everything in the cart must be eligible for next day delivery to qualify. Cut-off times vary by location.
According to Walmart, it will actually cost less to deliver orders the next day, because eligible items come from a single fulfillment center located closest to the customer. This will enable Walmart to ship items in one box, or as few as possible, for a shorter distance via less expensive ground shipping.
“We can offer fast, convenient shipping options because we’ve built a network of fulfillment assets that are strategically located across the U.S.,” said Lore. “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. And, with 90% of Americans living within 10 miles of a Walmart store, we’re well positioned to offer even faster delivery to customers in the future.”
Although Walmart says it will be less expensive to ship online orders the next day, CNBCreports that UBS analysts estimate the discounter will need to spend $215 million in incremental investments to match Amazon’s one-day shipping capabilities. UBS did term this expense “quite manageable” for Walmart.
During its most recent earnings call on April 25, Amazon announced it will spend $800 million to shift standard free Prime shipping from two days to one day. The e-tailer did not offer a specific timeline. While Prime shipping does require a monthly or annual membership fee, there is no minimum order amount and Amazon makes more than 100 million items eligible for free shipping, according to Consumer Reports.