Walmart has done more to revamp its delivery and fulfillment capabilities than just about every other large-scale physical retailer since the start of the pandemic. Now, the brick-and-mortar behemoth is tying up with the biggest player in online grocery delivery to give consumers more options for how they get their goods.
The retail giant is partnering with delivery specialist Instacart to offer same-day delivery starting in three California markets—Los Angeles, San Francisco and San Diego—as well as Tulsa, Okla., which all give customers the opportunity to have Walmart-purchased apparel at their doorstep within hours.
“The new partnership brings thousands of items—from groceries, alcohol and pantry staples to home decor and improvement, personal care, electronics and more—at everyday low prices from Walmart stores to customers’ doors in as fast as an hour,” an Instacart spokesperson told Sourcing Journal. “Customers in these areas can shop from all of their favorite Walmart aisles online and an Instacart personal shopper will pick and deliver the orders.”
Walmart has not responded to a request for comment.
Instacart already partners with major grocery chains like Albertsons, Aldi, Costco and Kroger, as well as Walmart’s main mass merchant rival Target. The platform also has an existing partnership with Walmart-owned Sam’s Club that will remain intact. This year, Instacart has expanded its roster of partners outside traditional grocers, bringing same-day delivery to customers of Big Lots, Staples and Rite Aid, while branching into new categories such as alcohol delivery and prescription delivery with Costco.
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Walmart reported U.S. e-commerce sales in the first quarter soared 74 percent year over year and grew 3.9 percent on a comparable basis, but the company doesn’t want that online growth to slow down.
In May, as the COVID-19 pandemic put the U.S. in lockdown mode with non-essential retailers closing their doors, Walmart combined its grocery mobile app with its main app so that consumers can shop for items in multiple departments, much like a trip to one of the stores. With the change, Walmart expanded its curbside pickup offering to include all products, not just groceries.
A month later, Walmart expanded its “store-to-door” Express Delivery service to nearly 2,000 total stores. Express Delivery enables customers to order across more than 160,000 items from Walmart’s food, consumables and general merchandise assortment such as groceries, everyday essentials, toys and electronics, and rivals Amazon’s popular Prime Now service.
Walmart has been embroiled in a back-and-forth tussle with Amazon when it comes to delivery innovation, and grocery has become yet another major corner in the rivalry. Amazon already offers grocery delivery services Amazon Fresh and Amazon Prime Now from its own warehouses and Whole Foods stores.
With its Prime membership and fast-growing logistics network, Amazon is able to link its Whole Foods stores with its Prime shipping benefits, allowing for all sorts of grocery shopping and delivery perks that give Amazon an edge over even established brick-and-mortar retailers like Walmart. But linking up with Instacart might help Walmart in the online ordering and logistics side of the business.
“Walmart fired yet another salvo in its delivery arms race with Amazon through its expanded relationship with Instacart,” said Moody’s vice president and senior credit analyst Charlie O’Shea. “The pandemic has accelerated the growth of grocery delivery by years, and it is clear that some level of this acceleration will remain once there is some ‘return to normalcy’, which many parties will be looking to capture. Walmart will continue to leverage its 5,300+ physical locations in the U.S., which is a compelling competitive advantage as it provides consumers with a same-day pickup option, with same-day delivery augmenting this capability, creating a very powerful one-two punch.”
The company even sought to compete with Amazon Prime through a loyalty program of its own called Walmart+, but the program has already undergone multiple delays, according to Recode. Walmart+ was initially scheduled for the March/April time period before COVID-19 hit, and was later expected to be launched in July. But Walmart+ has been postponed again, the report said.
The $98 per year subscription service would include perks like same-day delivery of groceries and general merchandise with reserved delivery times, discounts on fuel at Walmart gas stations and early access to product deals.
Walmart has made other moves throughout the pandemic, partnering with Shopify to bring 1,200 small businesses on its marketplace and teaming with ThredUp to sell nearly 750,000 pre-owned items across women’s and children’s apparel, accessories, footwear and handbags. The company is even testing out a predominantly checkout-free store in Fayetteville, Ark. to help shoppers save time and promote social distancing.
A June eMarketer study indicates that Amazon still leads the way in e-commerce sales by a wide margin at 38 percent of all online sales, while Walmart is ranked a distant second at 5.8 percent. So Walmart has plenty of work to do to catch up.
Instacart raised a massive $225 million funding round in June, increasing the company’s valuation to $13.7 billion, so the store delivery provider comes from solid financial backing and is accessible to more than 85 percent of households in the U.S. and more than 70 percent in Canada. Instacart now partners with more than 400 national, regional and local retailers across more than 30,000 stores in the U.S. and Canada.