Walmart wants online shoppers to pay more for faster delivery
Same-day grocery delivery is hard to come by these days, because walmart (WMT 1.40% ) and Amazon ( AMZN 0.34% ) have seen an increase in demand for their fast execution options. Now you’re in luck if you can get a delivery time slot within a week of ordering, if you can get one.
Amazon has made the decision to put new customers wanting to order through its Prime Now delivery service on a waiting list while it ramps up capacity. Walmart, meanwhile, just launched a new service called Express Delivery. Express delivery has been in the works for some time, but it could be especially useful for customers who badly need their items today. For a $10 fee on top of regular shipping, Walmart will guarantee delivery within 2 hours of ordering.
Express delivery will roll out to thousands of Walmart stores over the next few weeks, but it’s an overall poor response from Walmart to both Amazon Prime Now and the current economic environment.
Image source: Wal-Mart
Add extra capacity, but only for those who pay extra
Walmart says it now has 74,000 personal shoppers who select items from its stores for online grocery orders.https://corporate.walmart.com/newsroom/2020/04/30/walmart-introduces-express-delivery
The retailer has added additional shoppers to support the express delivery rollout, telling Tech Crunch the new service “is made available in addition to Walmart’s existing grocery pickup and delivery capability.” That’s a ridiculous claim, though, given that a shopper for express delivery might as well fulfill orders from Walmart’s standard grocery delivery service.
Requiring customers who want or need faster delivery to pay is a solution to an economic problem, but it’s only a short-term win (if a win at all) for Walmart.
Those who can most afford to pay for faster delivery are the wealthiest shoppers who likely already have an Amazon Prime account. More than half of Walmart’s top spending families are already Prime members, according to Recode’s Jason Del Rey. They may choose to pay for Walmart’s faster delivery when they’re in a bind and there’s no availability on Amazon, but they’re unlikely to stay when Amazon resolves their capacity issues.
Meanwhile, it paints a bad picture of Walmart at a time when 30 million Americans suddenly lost their jobs. Walmart has decided to accelerate the rollout of the program due to COVID-19, but it seems deaf to charge consumers for faster delivery right now. In a more normal economic environment, premium service would make more sense.
Amazon Prime is hard to beat
Amazon has taken a more egalitarian approach than Walmart, working on a first-come, first-served model. It established a waiting list last month as demand grew, and it is allowing Prime Now orders for customers as it increases capacity. There’s no extra cost for Prime Now, but Amazon doesn’t guarantee delivery within minutes of ordering either.
Admittedly, Amazon is sacrificing profits with this approach. That’s especially relevant in light of its $4 billion incremental spending forecast this quarter for COVID-related spending. But it builds capacity and demand for a service that ultimately benefits his business. Amazon may lose money in the short term on grocery delivery, but if it gets more customers to sign up for Prime, it will benefit in the long term from increased general merchandise sales and loyalty. client. It also establishes Amazon as a source of racesa major area of interest for the company.
Amazon also offers buyers of government benefit programs a discount on Prime membership. That said, Whole Foods’ prices are generally much higher than Walmart’s, so it might not be as appealing of a service for low-income families as Delivery Unlimited – the delivery subscription of grocery store from Walmart. (Delivery Unlimited subscribers still need to pay the additional $10 for express delivery.)
Walmart is unwilling to sacrifice further profits for increased customer activity on its digital platforms. This is a subject where management bumped their heads before. The extra charges for express delivery may be attractive to some short-term customers, but those customers are unlikely to stay long-term as many are already loyal to Amazon. Meanwhile, he’s alienating his major customers who can’t afford the service right now.
Amazon has shown that the reverse approach – catering to Prime customers and locking customers into Prime subscriptions – generally works well in the long run.
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