Today Walmart announced plans to expand Online Grocery Delivery to over 100 undisclosed U.S. cities in an apparent move to further compete with Amazon. (And to hold its ground as the leader in U.S. grocery sales.)
This means Walmart customers will be able to place an order online and get groceries delivered to their house that same day.
Previously, Online Grocery Delivery was available in six cities, but with this new expansion, by the end of 2018, over 40% of American households will be able to get groceries delivered to their doorstep.
There’s a $9.95 fee and a $30 minimum order requirement, but you can get your first order free with code: FRESHCAR. There’s no subscription and no price markups — this means you’ll get the same prices you’d get when you shop in-store at Walmart.
When you line up the comparables, it results in an intense competition for in-home grocery delivery between the two retail giants.
One one hand, Amazon’s Prime Now service is free to Prime members while Walmart’s costs $9.95 after the first free order. Prime members would only have to place 10 Whole Foods same-day orders and they’d recover the cost of their Prime membership ($99/year) at the fee Walmart is charging. Conversely, Walmart customers who use the service even twice a month will end up paying over $250 a year.
But if you look at the cost of the actual groceries at Walmart versus Whole Foods, there’s certainly a savings margin there.
And when you consider that Amazon’s service is currently only available in 32 cities, well, it makes the Amazon option non-existent for most of us. So far.
The grocery wars have been hot all year, but now Walmart is bringing the heat.
When Amazon bought Whole Foods last summer, we had a feeling it would awaken some sleeping grocery giants. To be fair, stores like Walmart, Kroger and Target had already begun to pivot in order to compete with Amazon by launching services like Online Grocery Pickup (Walmart), Clicklist (Kroger) and Order Pickup (Target). Plus, Walmart plans to expand Online Grocery Pickup by 1,000 stores this year. (Added to its existing 1,200 stores which offer the service.)
But with the Whole Foods purchase, Amazon gained the ability to get fresh food into Prime members’ homes efficiently, and grocery stores really started to worry. At this point, Walmart had already taken steps to compete with Amazon in the retail world. They bought Jet in 2016, implemented free two-day shipping in 2017 and automated mobile returns with Mobile Express Returns in the fall of 2017.
But this move by Walmart brings direct competition to the success of Amazon’s two-hour Whole Foods delivery service.
Will Amazon hit back with an expansion of its two-hour Whole Foods delivery?
Yes. Rumor has it that the retail goliath plans to expand Prime Now, but hasn’t released its list of cities for 2018 yet.
One thing we are curious to see is whether Amazon is truly able to dominate Walmart when it comes to groceries. If Walmart can continue to scale Online Grocery Delivery (and perhaps lower the delivery fee. . . pretty please, Walmart?) it may be difficult for Amazon to be competitive with Whole Foods as its only grocer. Then again, Amazon seems to always show up with its game face and then dominate.
What do you think? Would you rather pay $9.95 to have Walmart groceries delivered, or pay Whole Foods’ prices, but get delivery included with your Prime membership? Blurt it out in the comments.