Partners with Uber and Lyft to launch pilot grocery delivery service
We live in a world that is spinning a thousand miles an hour, and people just do not get the time for grocery shopping as they used to. But when your retailer puts in place services that allow you to be stress free with you grocery shopping and facilitates your shopping experience; this is how it looks like – please read ahead. Retail behemoth Wal-Mart Stores Inc. (NYSE: WMT) is looking to close the last-mile delivery gap with online merchants like Amazon.com Inc. (NASDAQ: AMZN) by partnering with ride-hailing companies Uber Technologies Inc. and Lyft Inc. to launch a pilot grocery-delivery service. Wal-Mart will start testing its grocery delivery service through Uber in Phoenix and Lyft in Denver in the next two weeks. The move comes after the Company launched a similar pilot for Sam’s Club in March 2016 with Deliv, a start-up that handles same-day deliveries for retailers including Kohl’s Corp. (NYSE: KSS) and Macy’s Inc. (NYSE: M), to deliver general merchandise and groceries to customers in Miami, Florida.
Doug McMillon, Chief Executive Officer of Wal-Mart, is expected to provide more details about the pilot grocery-delivery service at the annual shareholder meeting to be held on Friday, June 10th, 2016. Wal-Mart is spending $2 billion over two years to boost e-commerce sales and ward off intense competition from Amazon, which has been expanding its own grocery-delivery service, AmazonFresh, across major U.S. cities.
New pilot program – seamless to customer
Under the new pilot program with Uber and Lyft, customers will be able to shop online at grocery.walmart.com, then request for home delivery at the checkout stage for an additional delivery fee of $7.00 to $10.00. Customers will also have the choice of requesting for curbside pickup, a service that Wal-Mart launched at select stores in eight U.S. cities on October 13th, 2015, which comes at no extra cost.
After customers place the order at Wal-Mart’s online store, specially trained Wal-Mart Personal Shoppers will place frozen and fresh items in a designated, temperature-controlled holding area located at the back of the store. Wal-Mart’s online store has around 35,000 fresh groceries, dairy, meat, frozen foods, health and beauty products, and consumables. When a Wal-Mart shopper selects home delivery, they will need to choose a time frame for delivery.
At the other end, Wal-Mart’s team will call for a driver from Uber or Lyft using the mobile app to visit the store. The drivers will be told that these are grocery orders and not passenger pickups. The driver picks up the order and heads to the customer’s location, while Wal-Mart will call the customer to tell them that the order is on its way.
Expansion of curbside grocery delivery
While Amazon and startups, such as Instacart Inc., DoorDash Inc., the U.S. Postal Service, Postmates, and Shipt, are focused on quick, same-day deliveries of groceries and household items, Wal-Mart has been leveraging on its ability to combine its brick-and-mortar store sales with online shopping. Alongside pilot projects with Uber and Lyft, Wal-Mart has also expanded its curbside grocery delivery to 14 new markets for a total of 54 markets and in over 200 stores, as of April 2016. The curbside grocery delivery option allows customers to order groceries online and then pick them up at the curb of their local store. The innovative and convenient shopping experience has been a huge hit with a diverse target audience who have a busy schedule.
The curbside pick-up program is currently live in 40 markets, and the Company is expanding the program into 14 more markets in June 2016. By the end of July 2016, Wal-Mart will nearly triple the number of stores and markets that offer the curbside pick-up service, compared to the beginning of April 2016. According to Wal-Mart, 90% of its curbside customers are loyal users that do frequent business with the stores they buy from, and more than 90% of its baskets include fresh grocery items like dairy and produce. The Company has also been testing grocery home delivery service in San Jose, California, and Denver, Colorado.
Door delivery versus curbside pickup
When Wal-Mart announced its Q1 FY2016 results on May 19th, 2016, the Company reiterated that it is keen on building its e-commerce capabilities to drive growth and deliver a seamless shopping experience to customers. That being said, the Company feels that curbside pickup makes better sense for its price-conscious customer base since the home delivery option for food and groceries, although convenient, comes with an added cost. Wal-Mart currently gets more than half its U.S. revenue from food and groceries. That apart, Wal-Mart is also investing billions of dollars in building new fulfillment warehouses to speed up delivery time and increase the number of product categories sold on its website.
It appears that although Wal-Mart is exploring new avenues to enhance shopping experience, it is betting heavily on its curbside pickup program to pull in customers in the long-term.