Walmart expands its grocery delivery business, powered by Uber

Walmart is expanding a test of its grocery delivery service, powered by Uber, the company announced this week. The retailer is now offering grocery delivery in two new markets — Dallas and Orlando — which join Tampa and Phoenix as locations where consumers can shop online for grocery items, then opt to have them come to their home for an additional $9.95 fee.

Grocery delivery has been something Walmart has experimented with for years, starting with tests in Denver and San Jose of grocery delivery using its own service and trucks.

The tests involving Uber are newer, however.

In June, 2016, Walmart began a trial in Phoenix, which expanded to Tampa this March. In those locations, Walmart offers grocery delivery at five local stores per market.

This week’s Dallas test is larger, with 8 stores participating. In Orlando, there are four stores involved.

The grocery delivery service is available via the same online grocery shopping website where customers can place their pick-up orders — a service that’s much more broadly available today across Walmart’s stores. In total, there are now more than 900 locations with grocery pickup, a figure that’s up from 600 locations last year and up from 100 stores just two years ago.

For Walmart, grocery pickup in many ways makes more sense. It can leverage its existing store employees, its store square footage for things like extra coolers, its parking lots for dedicated pick-up spots and more. It also appeals to the typical Walmart shopper — the person who is cost-sensitive and who is not trapped in a dense, urban market but rather drives around running errands, picking up their kids and so on.

When grocery delivery is offered in a given market, the option appears at checkout alongside pickup. Both the pickup and delivery services require a $30 minimum spend, but delivery includes a $9.95 additional fee. Customers don’t necessarily see on the checkout page that their order is coming via Uber (via an¬†UberRUSH¬†integration), but they’re alerted to this fact via their email notification later on.

Walmart declined to say if that delivery fee is being split, or to what extent, with Uber. It also doesn’t share any specific metrics regarding how its grocery delivery efforts are performing, in terms of sales, number of users or repeat customers. However, it did say in its last earnings that its online grocery business was “growing quickly,” as part of a larger growth trend in e-commerce, where online transactions were up by 60 percent.

However, to what extent Walmart can continue to toy with grocery delivery before putting its foot on the gas is less clear. Amazon is gunning for this market. And with its $13.7 billion acquisition of Whole Foods, its grocery ambitions seem to be charting the same path as Walmart’s these days. With a retail store footprint in its grasp, Amazon also could implement pickup and delivery options in the future, to further challenge Walmart.