Walmart (NYSE: WMT) currently offers unlimited food delivery for an annual fee of US $ 98 in four markets. This fall, this number will be expanded to 200 markets, covering 50% of the US population. Delivery Unlimited takes advantage of Walmart's tremendous physical presence to acquire competing services such as Amazon (NASDAQ: AMZN) Prime Now and Target (NYSE: TGT). ship. Prime and Shipt cost 119 and 99 US dollars each year.
Walmart has established itself as the leading provider of online groceries, and Delivery Unlimited is the next step in consolidating this lead. Walmart's director of US e-commerce recently said in an interview with Recode that Delivery Unlimited will ultimately expand beyond food and encompass everything sold at Walmart's supercenters. This could be the factor that causes more consumers to choose Walmart instead of Target's same-day fulfillment options or Amazon Prime Now.
Catching Up with the Competition
Walmart's focus on online food has given Amazon and Target a head start in this regard, but has fallen behind due to the swift fulfillment of general merchandise sales. The company has recently taken steps to speed delivery and extend its NextDay program well ahead of schedule to 75% of the country. Nevertheless, there is a need to catch up.
Target has doubled its shipt delivery service over the past year. First, the service was expanded to include more generic goods in December, giving subscribers access to a larger portion of Target's inventory. In June, the company gave Target.com customers the opportunity to pay for a one-time delivery instead of subscribing to the service for a full year. In addition, Shipt has been more tightly integrated with Target.com and has set up a separate area for same-day delivery on the site. During the final quarter, Target realized that the same-day fulfillment options, including pick-up in the store, DriveUp roadside pick-up and ship-to-ship delivery, accounted for almost three-quarters of digital order growth.
Similarly, Amazon management pointed to the switch to one-day prime delivery as a reason to accelerate online retail sales in the last quarter. In the meantime, Prime Now continues to expand into new markets, benefiting from its presence in the Whole Foods market.
Walmart has the potential, thanks to its large number of stores, to reach many more customers than Amazon and even more than Target. There is a Walmart store within a 1
Takeover of Prime
The big challenge for Walmart with Delivery Unlimited is the acquisition of Amazon Prime. There are already over 100 million US consumers who have access to a Prime membership, and the idea of paying Walmart another annual fee to access another delivery program seems unlikely. This is the same challenge Target has been facing over the past two years when trying to scale up Shipt.
Marc Lore, CEO of Walmart E-Commerce, believes that consumers will recognize the value of Delivery Unlimited and will initially divert customers from their local customer supermarket and then replace Prime over time for many consumers. However, if that were the case, Target would talk about how fast Shipt subscriptions grow. Delivering from Target, local supermarkets and several national chains, Shipt has not yet reached the market share that Lore predicts for Walmart's more limited delivery option.
When Walmart tried to take over Prime in the past, that failed. An unlimited two-day shipping service was offered for $ 50 a year before it was scrapped, and all customers were offered faster shipping at no charge.
Consumers, especially consumers who have already subscribed to Prime, are urged to provide more cash for another delivery service is a difficult sale. However, the general trend in demand for same day replies could lead to more customers coming to Walmart if Lore's vision is to deliver everything in its same day Super Centers. It's going to be a long, hard road, but Walmart needs to take the next step towards digitization, as online food sales will not continue indefinitely at the same pace.