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Walmart Ups the Ante in Grocery Delivery Competition

By Jack M. Germain Jun 18, 2019 3:00 AM PT

Walmart has a new weapon in the grocery delivery wars against other top e-commerce rivals.

Walmart online shoppers can subscribe to a US$98-per-year "Delivery Unlimited" plan that aims to siphon customers from Amazon's Whole Foods and Target's home delivery programs.

Online grocery shopping is growing steadily as a key revenue generator and customer draw. The food division was critical in boosting Walmart's e-commerce performance in the first quarter of this year by 37 percent.

Delivery Unlimited is an expansion of the company's existing pickup and delivery offerings, which include free delivery to store located near the customer, or home delivery for a $9.95 fee per order.

This new annual subscription gives Walmart's online shoppers a third option. For $98 a year or $12.95 a month, Walmart customers can skip the per-order fee. They can place their order on Walmart's site or app and select a window for their order's delivery.

Overall, the new service offers significant additional convenience for a modest cost, said Charles King, principal analyst at Pund-IT.

"It will be particularly attractive for customers who shop at Walmart more than four or five times per month, like time-pressed families with substantial grocery needs," he told the E-Commerce Times.

Not Unlimited Details

Walmart customers should not expect full access to home delivery just yet even though the store launched this latest offering over the weekend. The company's website is vague about where the service now exists.

There is "a good chance Delivery Unlimited is in your area," the company says in response to a posted FAQ (frequently asked question). Consumers must enter their personal information to sign up for a free trial to find out for sure.

When the Delivery Unlimited trial ends, participating customers automatically become paid subscribers until they cancel. Their provided payment method will be charged in the meantime, and Walmart notes that it does not provide refunds.

Payment methods can not include Walmart gift cards or e-gift cards. Payment must be made by credit card or debit card. Select stores accept EBT (electronic benefit transfer) as a payment method.

How Delivery Unlimited Works

The free delivery process functions the same as Walmart's standard grocery delivery system. There are no restrictions on delivery times.

What could be a deal-breaker for some potential Delivery nlimited customers is that Walmart so far has no network of delivery professionals or independent contractors. Instead, it partners with delivery providers across the U.S., including Point Pickup, Skipcart, AxleHire, Roadie, Postmates and DoorDash.

Ramping Up Efforts

Walmart in recent months stepped up its efforts to compete against other online retailers. Its initiatives include free, one-day shipping for orders over $35, pick up towers at a number of its stores, and an in-home delivery service that allows employees to enter your house to place groceries directly into your refrigerator.

Walmart's latest home delivery plan seems to target Amazon Prime, which costs $119 a year, as well as Target's new Shipt delivery service, which costs $99 a year, and Instacart's annual Express membership of $99.

While it may appear that Walmart's new Delivery Unlimited service takes direct aim at Amazon Prime, the story likely is more nuanced, according to King. With Prime Amazon sweetens two-day delivery for eligible items with free access to video and other content.

"By focusing specifically on grocery items, Walmart's offering is more problematic for Amazon's Whole Foods division, especially when you factor in Walmart's aggressive grocery pricing," he said.

Potential Pressure Point

Walmart could be throwing down a new gauntlet in the battle for home delivery grocery customers. The new Delivery Unlimited offering poses an interesting challenge for all retailers, but for Amazon in particular, according to Sarah Assous, senior vice president at Zoovu. One of the biggest perks when it comes to Amazon and its Prime membership is expedited shipping.

"Now that other retailers are providing similar services with reduced subscription fees, it will be interesting to see how they adapt to and overcome this competition," she told the E-Commerce Times.

This is an interesting time in retail and e-commerce, as all major retailers are constantly trying to get one up on each another via enhanced customer experience offerings, Assous added.

"This news further puts pressure on the landscape to come up with the 'next big thing' to gain yet another advantage and win over customers' loyalty and hard-earned dollars," she said.

If the numerous reports that Whole Foods has been struggling financially are correct, Walmart's Delivery Unlimited is likely to add weight to Amazon's difficulties, said King.

"This is not a story of two elephants going head to head against one another so much as it is a wily predator identifying the weakest member of a herd and going unmercifully for its throat," he remarked.

Renewing Efforts

Delivery Unlimited as an online grocery-focused offering is more viable than ShippingPass was as a mass merchandise delivery program, suggested Jack O'Leary, senior analyst at Edge by Ascential. Membership programs also encourage loyalty. Amazon, Instacart, Target/Shipt and others will be hard-pressed to persuade shoppers who opt-in for Delivery Unlimited to switch to their own platforms.

"This is not Walmart's first foray into an e-commerce-centric membership program. In 2017 the retailer scrapped its $50 per-year ShippingPass program, which offered free two-day delivery on two million items from Walmart.com," O'Leary told the E-Commerce Times. "It has since invested heavily in its delivery capabilities, progressively offering faster delivery to more of the country for free (above a minimum order threshold)."

With its online grocery pickup solution and current grocery delivery offering, Walmart already has enjoyed success targeting new shopper segments focused on convenience in grocery shopping specifically, he pointed out.

"Upselling this existing base to a program that saves them money on convenient home delivery of groceries is a viable strategy," O'Leary said. "It also heightens competition with other top online grocery platforms, raising the stakes in the U.S. online grocery capabilities arms race."

Jack M. Germain has been an ECT News Network reporter since 2003. His main areas of focus are enterprise IT, Linux and open source technologies. He has written numerous reviews of Linux distros and other open source software. Email Jack.

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