Walmart Begins Next-Day Shipping Service for Online Shopping
May 20, 2019
On Tuesday, March 14th, Walmart began its free next-day shipping policy in what seems to be an attempt to compete with Amazon in the online shopping market. The practice was put into effect in Las Vegas, Nevada, and Phoenix, Arizona on Tuesday, and will be introduced to southern California within the next few days. The retail giant plans to enable next-day shipping to reach 75% of the country by year’s end; including 40 of the top 50 metropolitan areas.
According to an estimate from UBS on Monday, to enact one-day shipping on the national scale they’re aiming for, Walmart will need to invest $215 million. Marc Lore, head of Walmart’s e-commerce business in the U.S., stated last fall that Walmart was already capable of supplying 87% of the country with next-day delivery. As far as making one-day shipping realistically cost effective, Walmart plans to utilize its fulfillment centers. By shipping an entire order in one box from a Walmart fulfillment center nearby, as opposed to shipping several packages from distribution centers nationwide, the goal is to cut down on expensive long-distance shipping fees.
This new strategy seems to be bold but fitting for Walmart’s online business. Online retail stores like Amazon seem to be dominating the market with point-and-click shopping. Online grocery shopping has been steadily increasing. People who can’t leave their home or those who are just too busy to spend time navigating a supermarket are realizing that online grocery shopping and delivery are the best options in the modern world. Top retail stores like Walmart and Target have increased their online purchase options over the years to better compete with Amazon as the country’s desire for online shopping increases.
Walmart’s Advantages over Amazon
Last month, Amazon announced free one-day shipping for all Prime members, as opposed to the two-day shipping policy originally offered to members. Amazon is set to invest $800 million this quarter to make this switch. Amazon will be offering its employees up to $10,000 as a start-up fund to quit their jobs and create businesses delivering Amazon packages. Delivery vans will be leased to these qualified employees once they are accepted into the program.
The same day Amazon made their one-day shipping announcement, Walmart tweeted, “One-day free shipping…without a membership fee. Now THAT would be groundbreaking. Stay tuned.” Amazon Prime membership requires a $119 annual fee. Walmart online shopping has no fee or membership required for one-day shipping. The only stipulation would be that a Walmart online order must exceed $35.
The true advantage that Walmart has over Amazon is the 4,700 discount retail stores operating throughout the country. This huge network of brick-and-mortar locations, which reside within ten miles of more than 90% of U.S. consumers, is truly an invaluable asset to the competing retailer. These stores provide customers with the ability to pick out items on the Walmart website, drive to the store, and pick up their products on the same day. Walmart pickup options and same-day grocery delivery will keep the company in the race to compete with a global retail giant like Amazon in the U.S.
Online Grocery Shopping
While Amazon does offer online grocery delivery, they don’t seem to have the market monopolized yet. Walmart grocery pickup is a powerful amenity for the company. Those who order Walmart groceries online have the option of picking up their goods at a local store or having them delivered to their homes. As Amazon has no pickup option, this is an obvious advantage for companies like Walmart and Target.
When placing a Walmart online grocery order, many customers have the option of having their groceries delivered on the same day. Lore says Walmart is on track to offer pickup for online grocery orders at 3,100 stores and same-day grocery delivery from 1,600 locations by the end of the year. It seems that Walmart is attempting to set itself up to provide the best online grocery shopping experience in the U.S.
For those who grocery shop online, placing a Walmart grocery order online looks like the most comfortable and accommodating option. Unlike an Amazon fulfillment center, Walmart stores provide a pickup option for consumers who want to purchase cheap groceries online. UBS analysts estimate that roughly 60% of Walmart’s online revenue is generated from online grocery pickup. Not only can consumers fill their “shopping cart” from their home to avoid lines and crowded shopping aisles, but the orders can also be delivered straight to their doorstep as well.
Future of Retail Stores
Many retail stores are using similar methods to stay competitive in the online shopping world. Target currently offers next-day delivery for household essentials (also mandating orders be above $35), though this luxury comes with a $2.99 fee. The retailer also provides a same-day delivery through its shipping service. The service is available at 1,500 Target stores but requires a $99 annual membership fee.
Still, many popular retailers such as Target, Best Buy, and Home Depot are thriving due to the popularity of the “click and collect” shopping method. According to a survey from Coresight Research, 46% of online shoppers in the U.S. had picked up an online order from brick-and-mortar stores in the last year.
Small Business
This concept could potentially prove useful to smaller retail stores that are fighting to stay relevant in the digital world. Many people like to support small businesses; especially local businesses ran by residents of their hometown. However, a lot of these people will also choose convenience over loyalty. If small business owners were to adopt online retail practices on a smaller scale, such a move could boost a loyal clientele base.
If a consumer who likes to support local businesses were to find a shop or grocer in their town who offers online ordering, they might be more inclined to give their business to such an establishment. Two components of this strategy would be important for the small business adopting these practices:
- Brand Awareness: A small business attempting to grow online sales must ensure that the community they are trying to reach is aware of their existence. Facebook advertising, Pinterest networking, and a presence on Instagram are all good ways to stay in front of the people who live in your area.
- Adequate Supply: If a small business wants to improve sales with online ordering options, it’s important to ensure that the inventory level of items sold online are always kept well stocked. Also, a variety would be key to having loyal clients who feel they can come back to a local business’ website for many products. If people are going to a website only to purchase a single item whenever they feel the need, it creates a situation wherein such a business would have a harder time generating decent revenue. The more products one can order online from a small business, the greater the chance there will be that they’ll return to shop again.
Online Delivery for Local Businesses
Small businesses can utilize the popularity of online shopping to generate more clientele, but few of them would be making good money by shipping online orders in the ways that larger retailers like Walmart are doing. The ability to shop online, drive out to a local place, and pick up desired items is a great concept for small business owners to take advantage of. However, online delivery for such businesses is a bit trickier. If an Internet-savvy small business owner were so inclined, it might be a good idea to implement delivery service for goods offered on a website with reasonable limitations.
A more successful business with a proper staff could provide localized delivery to customers without going through an outside package delivery service like UPS or Fed-Ex. A small business that could not afford to pay employees to drive around town delivering orders would simply go through the United States Postal Service (USPS) and limit the distance allowed for shipping. A small business that offered online shopping could realistically offer special delivery features; provided they had enough of a client base to put a “faster-shipping” program into practice. Again, having a wider variety of online products available will increase the chances of shoppers buying from the site more frequently.
Walmart’s Online Stock for One-Day Shipping
Walmart distribution centers are set to offer one-day shipping on over 220,000 items. Shoppers can go to the website and find items on the next-day shipping list such as diapers, liquid detergent, electronics, toys, and non-perishable food items. This is a vastly wider selection from the 100,000 items available in-store at Walmart locations. Lore stated that customers would have their entire order shipped from a single warehouse. If the warehouse closest to them is out of stock when it comes to a particular item in the order, the shopper will be presented with a “save it for later” option. Items selected for “later” will be shipped the following day. Lore says extensive research and work has been done to make sure the right items will always be stocked at the proper fulfillment centers.
