Photo: Walmart
Lyft and Uber look to deliver same-day edge for Walmart
Walmart has announced plans to run pilots with the third-party ride-sharing services, Lyft (Denver) and Uber (Phoenix), to deliver online grocery orders to customers’ homes on the same day they are placed.
The goal is to determine how Walmart can further ease shopping for its customers in light of growing competition from a wide variety of competitors — Amazon, Kroger, Whole Foods, et al.
In each market, Walmart will receive customer orders that are then filled by associates trained specifically for the task. Once pulled together, Walmart will request Lyft or Uber send a driver to take the order directly to its final destination.
Customers pay for their orders online (a normal $7 – $10 delivery charge is included) and receive notice that a driver from one of the services is on the way with an estimated time of delivery. Walmart shoppers do not have to pay the drivers.
According to TechCrunch, at the proposed delivery fees, Walmart is likely to undercut others in the same-day grocery delivery space. Even so, price conscious Walmart shoppers are unlikely to switch in big numbers from ordering online and picking up in-store to the direct delivery alternatives facilitated by Lyft and Uber.
At its annual shareholders’ meeting last week, Walmart announced it was expanding curbside pickup of groceries to stores in 14 new markets by the end of this month. This follows a move to curbside pickup in eight new markets back in April.
“We’re thrilled about the possibility of delivering new, convenient options to our customers, and about working with some transformative companies in this test,” Michael Bender, chief operations officer of Walmart’s Global eCommerce division, told USA Today. “We’ll start small and let our customers guide us.”
Discussion Questions
DISCUSSION QUESTIONS: Do you see an opportunity for retailers to use services such as Lyft and Uber to grow their online grocery businesses? Is Walmart a good candidate?
Poll
BrainTrust
Ryan Mathews
Founder, CEO, Black Monk Consulting
Ed Rosenbaum
CEO, The Customer Service Rainmaker, Rainmaker Solutions
During many hours of the day Lyft and Uber have excess capacity, and the companies want to deliver as many moneymaking opportunities to their drivers as possible, so deliveries make sense. In turn, using ride-sharing services negates the need for retailers to take on the cost of trucks, drivers, insurance, logistics, etc. This seems like a win for retailers, ride-sharing services and consumers.
Of course the opportunity exists, but it is entirely dependent on the quality of the service available in the trading area. As a Michigan resident, for example, I can’t see an Uber-based system working out too well in Kalamazoo. The real problem here is that the retailer is essentially underwriting the integrity of the service which, in turn, isn’t really a company per se, but rather an association of contract workers.
So what could go wrong? Plenty.
Walmart is a great candidate to test such a system but, given the size of their market share, how could they possibly keep up if the idea proved wildly popular? There simply wouldn’t be enough drivers to keep up.
Bottom line: I’d watch the betas very carefully, and with a certain measure of cynicism.
Even if you are on the right track, it is very easy to get run over by runaway innovation. So kudos to Walmart for trying something new in grocery which is one of their most strategic core areas of business.
One of Walmart’s biggest assets is also one of its greatest challenges. A very large segment of Walmart’s core grocery customers pay with food stamps. You can’t use those online. This has kept those customers coming back to Walmart’s stores, but it won’t be an asset in this home delivery strategy where you book and pay online.
One of the largest competitors in the home delivery of groceries may not be Amazon. Kroger and other grocers are aggressively launching both curbside pickup and home delivery, and home delivery is often free with purchases over a minimum amount (free delivery for just $100 purchase in my market).
There are many miles to go before we see which solutions can make profitable deliveries to our doors. One thing is for sure, it’s a great time to be a customer!
I am not sure if this is the precise answer to the “same day” challenge. It does make sense. But, I am sure that the challenge will be solved and the retailers that solve it will have a distinct competitive advantage. Given opportunities to get one’s needs met without going to a store will just raise customers’ desires on what they should expect from a retailer.
It makes sense for Uber, Lyft and anyone else in that transportation space to deliver more than just passengers to a destination. And if the pricing model makes sense, why wouldn’t a retailer jump on an opportunity to create more convenience for their customers? And customers love convenience. It’s a win for all involved.
We are going to have full P2P delivery of groceries — much sooner than we expect. A newly announced test to use a digital key to allow a bonded delivery person to put your groceries into your refrigerator in Sweden (one-upping the “deliver to your Volvo’s trunk” approach) was met with considerable skepticism from American pundits. I think it is misplaced.
Ryan and others make good points about the variability of delivery services such as Uber and Lyft. Others regularly rail about retailers “giving up control of the customer experience” when they use Instacart. We need to change the paradigms here. How many people already have access to your house or car on an intermittent basis? How hard will it be, really, to control digital access and establish a trusted delivery service? Think about another discussion thread today about employees wearing Fitbits at work. We all screamed “too invasive” (and I agree). But these drivers/delivery people are essentially wearing a digitized personal tracking device every time you use this system. It is going to get done — and sooner than we think.
Great test with lots of unanswered questions. What if the consumer does not plan to be home when the delivery gets scheduled? What if the driver or consumer is not there at the appointed time? In-store pickup may still be more convenient. Of course Walmart is placing its reputation in the hands of the drivers. It will be interesting to see the test results.
This is a terrific move by Walmart to bring more choices for their customers while adding flexibility to Walmart’s own delivery options and strategic option set. Walmart gets to work with innovative companies, learn new processes and get immediate feedback from their customers — all good things to boost their capabilities and their capacity for change.
From a longer term perspective, this can be a marked productivity boost to the economy. The likes of Uber, Lyft and Deliv are applying technology to gain efficiencies in the people/product moving industry. The trucking industry has always sought to lower operating cost by applying technology to keep trucks rolling as full as possible with the fewest deadhead miles (non-revenue generating miles). Today, the new delivery paradigm combines existing capacity with new use-cases to bring efficiencies to suppliers and increasingly frictionless service to their customers.
Bottom line, there are new sources of supply in the “last mile” delivery model that add efficiency and service to the existing picture. The upside for those service providers and for retailers is significant and will be limited only by the latter’s ability to explore uses and integrate the new operations into their own business model.
This has the appearance of a win/win for Walmart, the customer and the car service. There are several buts. One of the biggest buts is, who is filling the orders? If it is a typically untrained store employee, it will never get much past the initial test markets. This is where I see the biggest problem. No one can select groceries like the customer itself. How will Walmart with untrained people make this a success? Yes, I read they are going to train them. But if you believe this is really going to happen, I have a bridge I will sell you….
Once again, as a supermarket owner that prides myself in quality foods, as many others do, how is this possible as Uber and Lyft do not have a car to safely deliver perishables? Sure they can drop off pop, chips,and staples, but I’m telling you right now, this is going to cause problems from a food safety issue. Unless the homes are very close by, for me anyway, I want my steak, shrimp, fruits, and dairy/frozen delivered intact, and cold. In very high density cities maybe, but there are health safety issues and for me, I wouldn’t let these services bring perishables to a home, as the liability would come back to me. Am I crazy? Probably, but keeping food stored at the proper temperature is the only way it can work, and it has been a concern of mine for many years. Invest heavily in the proper vehicles or risk potential backlash.
During the workday, with the exception of certain times like lunch and rush hours, I would imagine general demand for Lyft and Uber is slow. For consumers and retailers, grocery delivery during downtimes could be a great way to keep revenue up. As evident with Amazon’s recent launch of same-day delivery, a fair amount of customers enjoy (and are coming to expect) convenience. If Walmart wants to compete with Amazon, same-day delivery may be a necessity.