13 Ways Walmart's Grocery Services Are Competing with Amazon
Amazon bought Whole Foods last year for $13.7 billion. One of the company's first moves was to provide a heap of discounts to Prime members who shop there and offer curbside pickup for online grocery orders. Grocery delivery services weren't far behind. The move sent shockwaves through the industry, with everyone from independent grocers to Walmart wondering what's coming next. But Walmart is not some local mom-and-pop shop to be muscled out or pushed around. No matter how big Amazon gets, Walmart has a powerful weapon that Amazon does not — 4,672 U.S. stores. In fact, 90 percent of America lives within 10 miles of a Walmart and its huge array of products. With groceries accounting for more than half of Walmart's business, that's a street corner worth defending — and defending it, Walmart is.
Before the grocery wars were raging full steam, Walmart was already quietly laying the groundwork that would allow it to compete with the Amazon business model. Most notably, Walmart matched one of Amazon's biggest draws — free two-day shipping — although that courtesy does require a minimum spend of $35. It also launched Walmart Pay to make checkout easier and got future online grocery customers in the habit of picking up online orders in-store by offering discounts to customers who were willing to do just that.
With a grocery war brewing, Walmart's first move was to compete the old fashioned way — by cutting prices. As the world's largest retailer (by a longshot), Walmart has a unique power to put the squeeze on rivals by fighting a full-fledged war of price-cut attrition. Major chains like Kroger are already unable to keep up with Walmart's aggressive price slashing, which has now positioned Walmart as the cheapest grocery retailer in most of the country.
Walmart acquired Jet.com for $3.3 billion in 2016, and it quickly became evident that the acquisition was part of the grocery war arms race. The company named a veteran grocery executive to head Jet.com. Soon after, it announced that Jet.com would be launching a same-day grocery delivery pilot program in New York City.
In just a few short months, Walmart boosted its army of personal grocery shoppers from 18,000 to 25,000 — and the army is growing every day. Walmart personal shoppers are on the front lines of the grocery wars, and the company has invested heavily in their success. Personal shoppers must complete three weeks of training to learn techniques and skills like choosing the best cut of meat and the freshest produce.
Although the retail giant can't seem to come to an agreement with the well-known and popular Instacart, Walmart has made great strides in developing a network of delivery-service startups. Among the most prominent services are DoorDash, Deliv, and Postmates. This is a crucial step in Walmart's master plan — massive expansion.
In March of 2018, Walmart offered its grocery delivery services in just six markets. By the time the time America wakes up to a new year on Jan. 1, 2019, that number will have exploded by a multiplier of more than 16 to at least 100 markets. By that time, a full 800 Walmart stores will be participating in grocery delivery.
Building its delivery network isn't the only way Amazon is competing. It's made major strides in growing its pickup services, too. In 2015, just 100 Walmart stores offered grocery pickup. A year later it jumped to 600, which then became 900 in 2017. That number will more than double with the addition of more than 1,000 stores by the end of 2018.
The only requirement for Walmart's grocery pickup service is a minimum purchase of $30. Otherwise, it's free. No subscription is required, unlike Amazon, whose competing service requires a Prime subscription, which now costs $119 a year. Walmart customers who prefer grocery delivery pay a flat rate of just $9.95.
Walmart is expanding the reach of its grocery delivery service even further with four-wheel, third-party help in the form of Uber. The retailer tested a partnership with Uber in Phoenix in 2016. That led to an expansion of Uber-based Walmart grocery delivery in Tampa, Florida, and finally, the much larger Dallas market.
To compete with Amazon Flex delivery service, Walmart began testing its own in-house tech platform to develop a rival service. Debuting in New Orleans and Nashville, Tennessee, Walmart Spark Delivery is a direct-to-consumer delivery program that, like Flex, farms out grocery delivery to independent drivers who would deliver groceries within hours of a customer's order.
In an effort to stay ahead of the curve in the grocery wars, Walmart launched a test program that would send autonomous Waymo cars to chauffer customers to and from their grocery pickups. The way it would work, if the "early riders" test program is a success, is that customers would order groceries and when the order was ready, a driverless Waymo car would come pick them up. The autonomous vehicle would then drive the customer to the pickup center where a Walmart worker would pack the groceries into the car, and then the car would drive the customer home.
After Amazon bought Whole Foods, the mere presence of Amazon in the grocery space shook the meal-kits industry to its core, with companies like Blue Apron feeling an immediate impact. Walmart wasted no time in launching its own ready-to-prepare meal-kit business. Walmart's meal kits are now sold in the deli section for between $8 and $15.
In the grocery wars, Walmart is thinking big — really big. It tested a massive, 20-foot-by-80-foot self-service kiosk that functions as a gargantuan grocery vending machine, at a Supercenter in Warr Acres, Oklahoma. The idea is that customers place orders, employees select and bag the groceries and then stack them in the refrigerated kiosk. When customers arrive, they use a keypad to have their orders zapped to them within one minute — all without any human interaction whatsoever.
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