Walmart partners with Postmates on grocery delivery

Walmart is expanding its grocery delivering business with the help from new partner, Postmates, the retailer announced this morning. Postmates will initially begin Walmart Online Grocery Delivery in Charlotte, North Carolina with plans to reach other markets in the months ahead. Postmates joins Walmart’s existing delivery partners Uber and Deliv, who have been helping Walmart test deliveries in select markets, including Dallas, Denver, Orlando, Phoenix, Tampa and San Jose.

The addition of a new delivery partner is not unexpected – the company recently detailed its plans to expand its grocery delivery business across the U.S. in 2018, going from just 6 metros to 100 during that time. That will see Walmart offering delivery in 800 of its stores, and able to service over 40 percent of U.S. households.

To date, Walmart has been working with partners instead of rolling out its own delivery service  because it wants to be able to quickly scale up its grocery delivery operation, given the looming threat of Amazon and its own rapid expansion of Whole Foods grocery deliveries through Prime Now.

In fact, today Amazon announced Whole Foods grocery delivery has reached yet another major metro – Los Angeles and Orange County. Amazon has been moving fast to integrate Whole Foods into its Prime business, with everything from deeper discounts and coupons for Prime members to the option to have Whole Foods purchases delivered. And it has taken advantage of Whole Foods stores for its Amazon Lockers, selling its own electronics, and more.

Walmart hadn’t initially been focused on grocery delivery, touting that pickup was a more affordable option for its customer base due to the high costs of delivery. But it couldn’t let Amazon dominate the grocery delivery market either. However, Walmart’s Curbside Pickup is much more widely available and will be for some time. The service is now live at 1,200 Walmart stores, and expected to roll out to 1,000 more in 2018.

Walmart’s delivery service does offer a competitive advantage over some rivals, including Instacart and Shipt – it doesn’t mark up the cost of goods, nor does it require (or offer) a subscription. Instead, there’s only a $9.99 per-order fee, which helps to fund the partner-provided delivery.

The addition of Postmates as a Walmart partner could be beneficial to the delivery provider, too, which has been looking into ways it could better compete with the likes of Uber and Amazon, according to a recent report. The company has also been struggling to reach profitability, posting an operating loss of $75 million for 2017 on revenues of $250 million, Recode recently said after getting its hands on internal docs. The report said Postmates had discussed a sale with GrubHub. (For what it’s worth, Postmates denies Recode’s report, saying that it has a revenue run rate of around $400 million now. “We haven’t been looking for ways to compete, our API has been available for 4 years, it’s really a tool for retailers to better compete. In this case, a way for Walmart to better compete with Amazon,” a spokesperson said in response to Recode’s report.)

“Both Walmart and Postmates strive to make the lives of our customers easier,” said Dan Mosher, senior vice president, merchant lead at Postmates, in a statement about the Walmart partnership. “With our growing fleet of 160,000 couriers, we are confident that we’ll be providing Walmart customers with the ultimate convenience.”

Walmart didn’t say when Postmates would expand beyond Charlotte, only that it would “soon.”