Walmart said Tuesday (May 14) it will add free next-day delivery in Las Vegas and Phoenix on a wide range of general merchandise from Walmart.com. Walmart U.S. eCommerce CEO Marc Lore said the new service complements the retailer’s online grocery at 3,100 stores and delivery program with 1,600 stores by year-end.
“This has been a game-changer for busy families,” Lore noted in his blog post.
Lore said the new next day delivery of general merchandise will expand to Southern California in the coming days with plans to reach 75% of the U.S. population this year, which includes 40 of the nation’s top 50 metro areas.
“Walmart’s NextDay delivery offers a standalone, curated shopping experience where customers can browse up to 220,000 of the items most frequently purchased, ranging from diapers and laundry detergent to toys and electronics, with more assortment to be added. It is available on eligible orders of $35 or more, with the specific assortment varying by customer location,” Lore said.
Walmart said a customer visits Walmart.com and toggles into the NextDay delivery experience to view items eligible for free NextDay delivery. After adding items to their cart, the customer proceeds to checkout. Everything in the cart must be eligible for NextDay delivery to qualify. Cut-off times vary by location.
Lore said the new service is not just a win for customers but it also makes good business sense.
“Contrary to what you might think, it will cost us less – not more – to deliver orders the next day. That’s because eligible items come from a single fulfillment center located closest to the customer. This means the order ships in one box or as few as possible, and it travels a shorter distance via inexpensive ground shipping. That’s in contrast to online orders that come in multiple boxes from multiple locations, which can be quite costly,” Lore said.
He explained that is possible because Walmart has built a network of strategically located U.S. fulfillment assets. The retailer has also worked to ensure it has the right products in the right fulfillment centers based on where customers are located. This calculation is based on what customers are ordering.
Lore said NextDay delivery is another option for customers who might have already favored same-day grocery pickup and delivery options that work well for their busy lifestyles. With 90% of Americans living within 10 miles of a Walmart store, Lore said, Walmart is well positioned to offer even faster delivery to customers in the future.
Analysts have applauded Walmart’s use of its large store footprint to become a leader in omnichannel retail. The retailer has offered same-day pickup of general merchandise in stores since 2011 on select items. The two-day free shipping with no membership for orders of $35 or more became available two years ago.
Analysts with UBS estimate that for Walmart to match Amazon’s one-day delivery the cost would be roughly $215 million of new investments. UBS also noted Walmart’s massive footprint is an asset that if leveraged fully could radically reduce those costs.
“Walmart wants to make the promise they are doing everything they can to be as convenient as possible,” said Laura Kennedy, a retail analyst for consulting group Kantar. “They have to meet shoppers’ expectations. … Amazon has set those for the last 10 to 15 years.”
Last month Amazon announced it was rolling out one-day shipping, replacing the two-day shipping for its Prime membership base. This service would include more than 100 million items sold on Amazon.com. The move was seen by Wall Street as another way Amazon is upping the ante in the fiercely competitive online retail business.