Walmart to roll out unlimited grocery delivery plan, targets AmazonFresh

by Kim Souza (ksouza@talkbusiness.net) 503 views 

Walmart plans to go national with its unlimited grocery delivery subscription which will cost $98 annually, or $12.95 a month. The program will be in place by the end of the year for consumers in 1,400 U.S. markets, including Northwest Arkansas and central Arkansas.

On the e-commerce front, Walmart continues to chase Amazon, which has penetrated more than 51% of U.S. households with its Prime membership, according to eMarketer. Since Amazon purchased Whole Foods, Walmart and other grocery chains have been actively investing in online grocery delivery.

At $98, Walmart’s unlimited grocery delivery plan is priced below AmazonFresh, which costs $140 per year and is not available in many secondary metro areas such as Northwest Arkansas. AmazonFresh costs are in addition to AmazonPrime membership rates.

Walmart is already king of the grocery U.S. business in terms of sales. Kroger comes in second. Kroger does not have the expansive footprint of Walmart, neither does H-E-B or Publix. But each command sizable shares in the markets they serve. They also already offer some form of grocery delivery and curbside pickup, which analysts agree is crucial for long-term survival.

Walmart’s unlimited grocery delivery does cover three metro areas in Arkansas. Bentonville, Springdale and Fayetteville each have stores that will deliver in Northwest Arkansas. There are two stores in Little Rock, one in North Little Rock, Bryant, Sherwood and Jacksonville that will serve the central Arkansas market. There is also one store in West Memphis to serve households there. There were no stores in the Fort Smith market designated to offer this unlimited service.

Walmart said if customers in the markets don’t want to subscribe and save, they have the option to pay per delivery which can range from $7.95 to $9.95.

“Grocery Delivery takes convenience to a new level, and our customers love it. With Delivery Unlimited, we’re providing incredible value for our customers and leveraging our unique assets to save them both time and money,” said Janey Whiteside, chief customer officer at Walmart.

Walmart began piloting Delivery Unlimited in four markets – Houston, Miami, Salt Lake City, and Tampa – earlier this year. The retailer said based on the positive response of customers, it is expanding the program to all 200 metro areas where grocery delivery is now available. Grocery pickup is now in nearly 3,000 stores and online grocery delivery is an extension of that service in select markets where demand dictates.

As the company continues to expand grocery delivery, unlimited delivery will also expand. Walmart said the service will be available in more than 1,600 stores and more than 50% of the country by the year-end. Walmart also said the membership comes with a free 15-day trial which allows customers to try with no risks or commitments.

Customers place their orders online at Walmart.com/grocery or on the existing Walmart Grocery app. Walmart said customers will find the same everyday low prices online as in stores as the retailer has worked hard for price transparency with no hidden costs.

“We’ve been investing in our online grocery business by quickly expanding our Grocery Pickup and Delivery services. Delivery Unlimited is the next step in that journey,” said Tom Ward, senior vice president, digital operations, Walmart U.S. “By pairing our size and scale and these services we’re making Walmart the easiest place for customers to shop. Combine that with the value we can provide and customers can not lose.”

Some analysts have said Walmart is hoping to build loyalty by offering the unlimited delivery subscription. Walmart Executive Vice President of Supercenters Todd Harbaugh said this week online grocery delivery is what some people expect. He said some consumers want their orders within an hour or two and Walmart just wants to give its customers choices.

The one negative for Walmart’s e-commerce business is that the grocery inventory and app is separate from the general merchandise app and inventory system. Walmart said it is working to consolidate the two systems. Target has one system as does Amazon which gives customers the added convenience that Walmart cannot provide.

Walmart’s chief merchandising officer Steve Bratspies said recently the online grocery net promoter scores (an indication of customer affinity) are in the 80%-plus range which is some of the highest scores in the industry. He said moving to one-day delivery on general merchandise items will be cheaper for Walmart than two-day delivery. He said Walmart’s store footprint in proximity to 90% of U.S. households gives the retailer an advantage for delivery by using stores as fulfillment centers. That, coupled with the mirroring of inventory between stores and local distribution and fulfillment centers in recent months, is getting the most-ordered products closer to the end consumers.

Walmart said customers who try online grocery, usually return. Harbaugh said demand for online grocery pickup has meant hiring and training for more than 45,000 personal shoppers who pick the orders. He said those employees chosen to be personal shoppers are often the “cream of the crop.” He said they must undergo a three-week training program to learn how to select the freshest produce and best cuts of meat. He said the workers are timed on their picking routes and they are the closest to the end customer of any other employee in the store.

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