Walmart Expands Online Grocery Delivery to 100 Cities

 nytimes.com  3/14/2018 5:22:06 PM   Tiffany Hsu and Chad Bray
A Walmart store in Fulton, N.Y. Walmart said its home delivery service for groceries would be available to 40 percent of households in the United States by the end of the year. Roger Kisby for The New York Times

Walmart is expanding its online grocery delivery service to more than 100 metro areas in the United States as it tries to keep pace in an increasingly expensive turf war with Amazon, Target and other retailers over the lucrative e-commerce market.

On Wednesday, Walmart said its delivery service, currently offered in six cities and surrounding areas, would be available to more than 40 percent of American households by the end of the year.

Some orders would be delivered on the day they are placed, the company said. Walmart plans to use 800 of its own stores to fulfill customer requests, and partner with Uber and other driving services for delivery.

“We’re saving customers time by leveraging new technology, and connecting all the parts of our business into a single seamless shopping experience: great stores, easy pickup, fast delivery, and apps and websites that are simple to use,” Greg Foran, the chief executive of Walmart U.S., said in a statement.

Walmart charges a $9.95 fee for its grocery delivery service, and requires a minimum order of $30.

The company’s newest challenge to Amazon targets two industries that are increasingly appealing to retailers: e-commerce and grocery. Ever since Amazon rattled rivals in June by buying the upscale grocery chain Whole Foods for $13.4 billion, other retailers have been racing to provide home delivery of groceries bought online.

In October, Costco introduced a two-day delivery option for dry groceries and a same-day alternative for fresh goods through Instacart, a delivery service. Target said in December that it would purchase the online same-day delivery service Shipt for $550 million in cash.

Earlier this month, Amazon said it would offer same-day delivery of groceries from Whole Foods in six cities. On Monday, Kroger followed suit with an announcement that it would expand the number of cities eligible for home delivery of groceries through Instacart.

But a grocery delivery service could be difficult to implement and market to shoppers, experts said.

“There is a lot of experimenting going on as everyone tries to figure out that last-mile delivery — it’s a tough economic equation to make work,” said Mike Knemeyer, a professor of logistics at Ohio State University. “But if you can, you’ll have a big head start on the others, and you’ll end up making money not just in groceries but on all of the things that you sell.”

Walmart’s announcement follows several substantial investments by the company into its growing suite of online offerings, including a partnership with Google to sell Walmart products on Google Express, and a $3.3 billion acquisition of Jet.com, a bulk online retailer. But success has sometimes been fickle — Walmart’s online sales increased 23 percent in its most recent quarter, less than half the rate of growth in each of the prior three quarters.

Walmart also reiterated on Wednesday that it will expand its curbside grocery pickup service, which allows customers to order food online and collect it at stores, to another 1,000 locations this year from the 1,200 locations where it is already offered. And last month, the company said it would offer members of its Sam’s Club chain free shipping of online orders for an annual fee of $100.

Door-to-door delivery, however, requires a level of logistical planning that has stumped many retailers.

Walmart’s service requires customers to visit the company’s website or grocery app to place orders. The chain will then send one of its 18,000 personal shoppers to collect the selected items.

Each of those employees — along with the thousands more that Walmart said it would add this year — undergoes a three-week training program that teaches them to pick out the best produce and meats.

After the order is prepared in the store, a delivery service like Uber would whisk it away to the customer.

Offering expanded online grocery delivery is an “informed gamble” for Walmart, Mr. Knemeyer said, one that will likely serve up side benefits such as data collection and inroads into the affluent urban consumer base.

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