Walmart Testing Same-Day Delivery

Discussion
Oct 10, 2012

Take that, Jeff Bezos!

Walmart appears intent on blunting any advantage that Amazon.com might gain from expanding its same-day delivery service by testing a similar option of its own.

According to numerous reports, Walmart is testing same-day deliveries in Minneapolis, Northern Virginia, Philadelphia and the San Francisco Bay area. The retailer first tried out the concept in San Jose in 2010 and expanded the test to San Francisco last year.

Consumers in test markets have the option of placing orders before noon and then choosing a four-hour window for UPS to make deliveries. Consumers will have roughly 5,000 items from which to choose, including consumer electronics and toys. Deliveries, regardless of the number of items ordered, will cost consumers $10. Walmart has set a minimum order amount of $45 in California.

"Connecting our website with 4,000 physical stores across the country really gives us a leg up," Ravi Jariwala, a spokesperson for Walmart, told The Washington Post.

Amazon began testing same-day delivery, according to The Associated Press, in 2009. It currently has the service available in 10 markets around the country.

A report by the Financial Times in July speculated that Amazon was building distribution centers around the country to enable it to roll out same-day service on a wide scale.

"Everybody in retail is terrified of Amazon, and they’re terrified of losing more wallet share to Amazon," Sucharita Mulpuru, an analyst with Forrester Research, told The New York Times.

Will same-day delivery service on a wide scale from either Amazon.com or Walmart be a game changer in retail? What unintended consequences do you think may arise from the availability of same-day deliveries by retailers with a national reach?

Join the Discussion!

20 Comments on "Walmart Testing Same-Day Delivery"

Notify of

Sort by:   newest | oldest | most voted
Lisa Bradner
Guest
Lisa Bradner
4 years 8 months ago

This is the next step in the continuing evolution of big box stores. Walmart had a 20+ year run of untouchable cost advantage based on its supply chain: cross docking, shipping large pallets into huge stores, etc. Now the web has changed the game. Increasingly, retailers are going to look at their square footage differently tweaking the balance between shopping space and “mini-DC.” The logistics of retail are taking a huge turn and it’s fascinating to watch.

I suspect the next thing we’ll see is big box retailers knocking off the Amazon Prime concept so they can get a bigger share of wallet without charging $10 each and every time. It will also allow Walmart to drop the $45 requirement over time. As the cost efficiencies that gave Walmart scale and competitive advantage in the first place shift and erode and as Amazon takes on greater costs in the physical world the bricks and clicks financial models may start coming a whole lot closer. Unintended consequences? Maybe we’ll see the return of the local delivery boy — George Bailey in Mr Gower’s drug store! 🙂

Max Goldberg
BrainTrust

Same-day delivery has the potential to be a game changer. It depends on the number of items offered, minimum purchase requirements and cost for the service. Why get in the car when gas is over $4 a gallon and drive all over looking for an item at the best price, when Amazon, and now Walmart, can deliver it to your door in 4 hours?

Adrian Weidmann
BrainTrust

Same-day service is another example of the nano-second world in which we live. When shoppers make that purchase decision, they want instant gratification. Larger items that often don’t fit in cars could be an immediate winner of this service. Large flat panel television displays that could be in your living room by the end of the same day could inspire purchase decisions.

The USPS may want to wake up and respond to this trend instead of waiting for government subsidies! It will certainly be good business for UPS, FedEx and local courier services. Walmart is an incredibly talented logistics company and this will play to its strengths. Whether other retailers that have a national reach have the logistical expertise to pull this off remains to be seen. It will also reignite the state and local sales tax discussion.

Ken Lonyai
BrainTrust

This is really the dawning of the age of the consumer, as control and influence of their shopping experiences blossom in all directions. So it won’t matter to them how difficult/costly it is for retailers to offer all the perks that are well on their way to being expected retail staples, like free shipping on returns, no restocking fees, loyalty benefits, price matching, and now possibly…same-day delivery. Inevitably, if you’re a merchant and you can’t offer these benefits, you are going to be rendered uncompetitive.

It will especially hurt the mom and pops that don’t sell exclusive merchandise.

So it’s hard to fathom same-day delivery being wide scale unless wide scale refers to large merchants. For them, same-day delivery is likely going to be a necessity in the not too distant future and at some point, even free same-day delivery. And who knows? If it goes that far, can free return pick-ups be ruled out?

Oh and UPS, FedEx and localized couriers will be eating it up.

Roger Saunders
BrainTrust

Those fortunate to being working are suffering from time poverty. The price of gasoline is impacting a shopping trips. And, the consumer continues to gain confidence in navigating the internet to shop, compare, and purchase.

The combination bodes well for same-day delivery of selected merchandise. Based on the June, 2012 BIGinsight Media Behaviors & Influence Study, 27.6% of American Adults purchase goods online “Regularly.” That compares to 24.7% who said they purchased online regularly in June, 2006.

Walmart will need to listen to the consumer, however, and thoroughly understand them. Amazon still holds a dominant lead in terms of the website used most often for shopping — 45.4%, compared to Walmart.com at 2.6% of respondents.

Gene Hoffman
Guest
Gene Hoffman
4 years 8 months ago

Same-day service on a wide scale could be viewed as being good for the consuming public and thus also become honorable by being considered necessary.

If same-day deliveries were to become the prevailing paradigm, cost pressures will rise and yet a “newer” way of doing business will be innovated by someone. Who?

Joe Nassour
Guest
Joe Nassour
4 years 8 months ago

I think that same-day delivery will be a major benefit for some products and categories. Same-day delivery will not be much of a benefit for most of the categories.

If I need printer ink to make a deadline for a customer, then same-day is critical. But if I need a TV or stereo, same day is a nice to have.

Brian Numainville
BrainTrust

This will be viewed by many consumers as a huge positive as being able to fulfill immediate needs (more or less) on purchasing items. Amazon certainly provides a quick delivery with Prime, and as they move to more same day delivery it will get faster. While Walmart has a physical presence in many places, much will depend on the selection of items offered as to whether this will work well for consumers with Walmart. Obviously this is not a positive development for retailers who compete with Walmart on mainstream items, but specialty retailers should feel less of an impact.

Anne Howe
BrainTrust

I’d like to see the stats from Prosper on Gen Y and Boomers regular online shopping behavior versus just all US adults. If I were Walmart, there’s a major health support opportunity with aging boomers that have been loyal to them in the HBC category, AND there is another play with Gen Y for all the stuff they need to outfit their homes and families that, while working, they can click and expect delivery that very evening, leaving more time for dinner, soccer, swimming or whatever they choose to do after work.

Will Walmart be next with QR code-based shopping in both doctor’s offices and public transit spaces? They’d be silly not to try.

Bill Bittner
Guest
Bill Bittner
4 years 8 months ago
To simply answer the discussion question “YES,” and in a big way. The impact of same-day delivery will change the whole face of the online environment as online retailers without the distribution network become “showrooms” for the retailers who can deliver the goods. It may even shift the whole consumer emphasis from price to fulfillment, making them willing to pay a little more to have the product in hand the same day. I am a little nervous with the Wallmart comment about using their 4,000 locations. I am not sure shipping from a retail location, where you are not in control of the inventory because of in-store purchases, is a good way to address fulfillment. It works for some categories (grocery) where easy substitutions are possible, but in other categories it can be a show stopper. I have already had an experience with “shop online, pick-up at store” where I got a subsequent order cancellation email because the inventory was not accurate. Between breakage, misplacement, and customer purchases it is problematic to ensure an online customer their order will be filled. As emphasis on the fulfillment aspect increases, I think there is a role for a new type of distribution… Read more »
Tom Redd
Guest

Will wide scale same-day delivery service from Walmart and Amazon change the retail game? YOU BET. Unless I need a widget right now, I can certainly wait a few hours to get it and avoid driving, parking, finding, checkout, and driving once more (Gas prices anyone? Value of time anyone?). When it comes to convenience and instant gratification, shoppers in the US want to be on the cutting edge.

The drive for same-day service will increase the pace that brick and mortar retailers pursue an omni-channel journey. An unintended consequence will be the discovery of the amount of internal organizational work necessary to bring this about (and how to do so profitably) and the inadequacy of existing systems and processes for such a future. Maybe another is that we’ll find shoppers spending more time on eCommerce sites than they do in stores which will drive Next-Gen eCommerce sites that are even easier to search and shop, and become customizable to my own shopping habits.

Tony Orlando
BrainTrust

It will be a game changer for the future, as time squeezed people will use the service. Ten dollars is small potatoes for 2 income families needing something without having to leave the house.

Mom and Pops always feel the impact every time a game changer like this goes into effect. Fresh food is still the beacon of hope for stores wanting to grow, as the non-food staples will continue to die on the vine in most stores that do not offer some sort of same-day delivery.

Steve Montgomery
BrainTrust

Same-day delivery is a game changer. While B&M have had the advantage of allowing the customer to touch the actual physical product waiting for product delivery negated some of that advantage retailers had over internet retailers. Adding same-day delivery to B&M’s offer could prove to be a great equalizer.

Gene Detroyer
BrainTrust

I’ve told the story several times about my wife’s first experience with Zappos and her announcement “Why would I ever go to a store again?!”

One of the challenges to that statement was that you could go to the store and buy the item right away. Same-day delivery takes that argument away. Wake up, retailers. It is a whole new world and it is not boxed inside your store.

This is customer service!

Herb Sorensen
BrainTrust
Too often, retailers forget the three essential components to retail: 1. Offer and acceptance – bringing the shopper’s mind to acceptance of what the retailer is offering; 2. Delivery of the goods (or services;) 3. Payment. The only way to increase sales with your existing customers is to speed up one or more of these components: 1. Sell faster; 2. Deliver faster; 3. Accept payment faster. The third wave of retail will involve massive increases in the efficiency of all three of these components – two expedited by smart phones (digital mediation) and the other strictly logistics. So Walmart and Amazon are locked in a logistics war, where neither will likely land a knockout punch, to the other. The main impact will be collateral damage to retailers that may have excelled in the second wave of retailing, but are wedded to what they have done, and will continue to do it into oblivion. I have often commented that Amazon is the world’s premier SELLING business and Walmart is the world’s premier LOGISTICS business. This same day delivery is a logistics move, and will be VERY effective. Whatever you can sell with 3 days delivery, you can probably sell at least… Read more »
Mark Burr
Guest
4 years 8 months ago

The unintended consequence for Walmart will be an increase in same store sales. The thinking by Walmart will be limited by store locations.

Amazon will be a lot more innovative and consider not just 5,000 locations, but maybe 100,000 locations.

Is it a game changer? No. Is it good for the consumer? Yes.

Pete Cleaveland
Guest
Pete Cleaveland
4 years 8 months ago

If Walmart can handle the demands of real-time inventory control and can attain the level of in-store discipline required, this will be huge for them…and, as a consequence, for everyone in retail.

Interesting to learn how UPS is handling this challenge. Today they do not deliver on the weekends or holidays…prime shopping days. They are also known for their rigid adherence to processes, systems and discipline. Handling this will require flexibility.

Cathy Hotka
BrainTrust

Same-day delivery would be huge, particularly for moms who work outside the home and don’t want to spend the evening shopping. This is a very impactful game changer. My only question is about the delivery area; I’m 20 miles away from the closest Walmart; would they deliver to people like me?

Kenneth Leung
BrainTrust

The key will be the change in customer expectations created by same day delivery. As the delivery time shortens, it changes the baseline consumer expectations of “acceptable” delivery time. Over time, it drives retailers and shipping companies to collaborate much more closely to optimize pickup from distribution points and delivery to consumers. The pressure will definitely be on for smaller retailers who doesn’t offer unique products that had relied to convenience as it sole competitive advantage.

Lee Peterson
BrainTrust

This is the Holy Grail of online buying. It also enables you to create ‘endless shelf’ in store. As a matter of fact, why would I want to even carry a bag with all that stuff in it?

Store as ‘showroom’ = next huge phase of retail. Love it!

wpDiscuz

Take Our Instant Poll

Will same-day delivery service on a wide scale from either Amazon.com or Walmart be a game changer in retail?

View Results

Loading ... Loading ...