In a move designed to directly challenge Amazon, Walmart today announced it’s dropping the $35 minimum order requirement for its two-hour “Express” delivery service, a competitor to Amazon’s “Prime Now.” With Walmart Express Delivery, customers can order from Walmart’s food, consumables or general merchandise assortment, then pay a flat $10 fee to have the items arrive in two hours or less.
The service is useful for more urgent delivery needs — like diapers or a missing ingredient for a recipe, SVP of Customer Product, Tom Ward, noted in an announcement. They’re not meant to sub in for larger shopping trips, however — Express orders are capped at 65 items.
Today, Express Delivery is available in nearly 3,000 Walmart stores reaching 70% of the U.S. population, Walmart says. It builds on top of stores’ existing inventory of pickup and delivery time slots as a third option, instead of giving slots away to those with the ability to pay higher fees.
Like Walmart’s grocery and pickup orders, Express orders are shopped and packaged for delivery by Walmart’s team of 170,000 personal shoppers and items are priced the same as they are in-store. This offers Walmart a potential competitive advantage against grocery delivery services like Instacart or Shipt, for example, where products can be priced higher and hurried or inexperienced shoppers aren’t always able to find items or search the back, having to mark them as “out of stock.”
In theory, Walmart employees will have a better understanding of their own store’s inventory and layout, making these kind of issues less common. It will also have direct access to the order data, which will help it better understand what sells, what replacements customers will accept for out-of-stocks, when to staff for busy times and more.
In addition to grocery delivery, Express Delivery competes with Amazon’s Prime Now, a service that similarly offers a combination of grocery and other daily essentials and merchandise. Currently, Prime Now’s 2-hour service has a minimum order requirement of $35 without any additional fees in many cases for free delivery– though the Prime Now app explains that some of its local store partners will charge fees even when that minimum is met, and others may have higher order minimums, which makes the service confusing to consumers.
Out: $35 minimum on Express delivery orders
In: Endless take-and-bake pizza delivered to your doorStarting today, no more $35 min. order requirement for Express delivery. Another way we’re making it easier than ever to get what you need when you need it. https://t.co/lCgQItLeRn pic.twitter.com/HONlL0SzxG
— Walmart Inc. (@WalmartInc) March 1, 2021
Walmart’s news comes at a time when Amazon appears to be trying to push consumers away from the Prime Now standalone app, too.
When you open the Prime Now app, a large pop-up message informs you that you can now shop Whole Foods and Amazon Fresh from inside the Amazon app. A button labeled “Make the switch” will then redirect you. Meanwhile, on Amazon’s website touting Prime’s delivery perks, the “Prime Now” brand name isn’t mentioned at all. Instead, Amazon touts free same-day (5-hour) delivery of best sellers and everyday essentials on orders with a $35 minimum purchase, or free 2-hour grocery delivery from Whole Foods and Fresh.
When asked why Amazon is pushing Prime Now shoppers to its main app, Amazon downplayed this as simply an ongoing effort to “educate” consumers about the option.
Walmart, on the other hand, last year merged its separate delivery apps into one.
After items are picked, Walmart works with a network of partners, including DoorDash, Postmates, Roadie and Pickup Point, as well as its in-house delivery services, to get orders to customers’ doorsteps. This last-mile portion has become a key area of investment for Walmart and competitors in recent months — Walmart, for example, acquired assets from peer-to-peer delivery startup JoyRun in November. And before that, a former Walmart delivery partner, Deliv, sold to Target.
This is not the first time Walmart has dropped order minimums in an attempt to better compete with Amazon and others.
In December, Walmart announced its Prime alternative known as Walmart+ would remove the $35 minimum on non-same day Walmart.com orders. But it had stopped short of extending that perk to same-day grocery until now.
To some extent, Walmart’s ability to drop minimums has to do with the logistics of its delivery operations. Walmart has been turning more of its stores into fulfillment centers by converting some into small, automated warehouses in partnership with technology providers and robotics companies, including Alert Innovation, Dematic and Fabric.
And because its stores are physically located closer to customers than Amazon warehouses, it has the ability to deliver a broad merchandise selection, faster, while also turning large parking lots into picking stations — another thing that could worry Amazon, which is now buying up closed mall stores for its own fulfillment operations.
Walmart today still carries a $35 minimum on other pickup and delivery orders and same-day orders from Walmart+ subscribers.
Early Stage is the premiere ‘how-to’ event for startup entrepreneurs and investors. You’ll hear firsthand how some of the most successful founders and VCs build their businesses, raise money and manage their portfolios. We’ll cover every aspect of company-building: Fundraising, recruiting, sales, legal, PR, marketing and brand building. Each session also has audience participation built-in — there’s ample time included in each for audience questions and discussion.
Comment