This month, Amazon announced that it is investing $ 800 million in its warehouses and delivery infrastructure to double the speed of Prime shipping down to a single day. Now Walmart is following suit with a one-day shipping ad of its own. Rival retailer says it will begin offering free next-day delivery at select Walmart .com orders over $ 35 – without a membership fee.
This offer will initially be available to customers in Phoenix and Las Vegas only beginning Tuesday, May 14, 2019, and will then expand to customers in Southern California in the coming days. The deployment will continue “gradually” over the next several months, with the goal of reaching 75% of the US population, including 40 of the top 50 US meters, by the end of the year.
Currently, Amazon Prime covers more than 100 million items, which are available for two-day shipping to more than 100 million Prime subscribers. Making an inventory of that size available for shipping in one day is a massive investment on Amazon’s part.
Walmart, on the other hand, is starting smaller. Your NexDay delivery will be available as a curated, standalone shopping experience where customers can browse up to 220,000 of the most frequently purchased items.
This includes things like diapers, electronics, toys, and household necessities, and more soon. Everything in the cart must be eligible for the next day and a total of more than $ 35 to qualify. Order deadlines will vary by location, Walmart says. Orders will be delivered primarily by national companies and, in some cases, by regional companies.
This more limited approach in terms of inventory (for now at least) makes NextDay more of a competitor to Target Restock than to Amazon’s one-day Prime ambitions, as, like Restock, it requires a minimum order of $ 35. However Restock has customers who “fill a box” with items and focus heavily on day-to-day shopping. Meanwhile, Walmart’s NextDay selection is broader than Restock’s 35,000 items. (However, prior to the Walmart announcement, Target released the news that its same-day “Drive Up” street service had expanded to more than 1,250 US stores.)
Walmart’s focus on matching Amazon’s efforts, but with a different set of conditions and “without a membership fee,” is now on par.
For example, Walmart announced in early 2017 that it would begin offering free two-day purchases on more than 2 million items without the need for a membership, as long as orders total $ 35.00 or more. The retailer had been testing such an expedited shipping system for years, starting with a test of its response to Prime in 2015.. Nicknamed Shipping costs At that time, the program initially started with 1 million items and delivered in three days, then was reduced to two days, while the number of eligible items doubled.
Last October, Walmart also expanded two-day shipping to its Marketplace sellers.
Now, you are focused on one day. Walmart says this is not responding to news from Amazon, but had plans already underway.
“We are able to offer fast and convenient shipping options because we have built a network of strategically located fulfillment assets in the US We have also done extensive work to ensure we have the right products in the right fulfillment centers based on where they are shipped. find customers. located and what are they ordering, ”said Walmart E-Commerce President and CEO Marc Lore.
Lore had sold his e-commerce business Jet.com to Walmart for $ 3 billion in 2016. While it lives as a more urban-focused delivery service, its influence on Walmart’s broader e-commerce efforts, particularly in Around delivery logistics, you see these expanded efforts to improve delivery times also lower costs while keeping prices low for consumers. Jet, for example, had offered credits to consumers who bought their items from the same nearby store. That is not entirely different from what Walmart NextDay is doing.
As Lore explains, NextDay is affordable for Walmart.
“Our new NextDay delivery is not only great for customers, it also makes good business sense. Contrary to what you might think, it will cost us less, not more, to deliver orders the next day,” he says. Because eligible items come from a single fulfillment center located closer to the customer. This means the order is shipped in a box, or as little as possible, and travels a shorter distance via inexpensive ground shipping. That in contrast to online orders that come in multiple boxes from multiple locations, which can be quite expensive. “
Forrester analyst Sucharita Kodali suggests a bit more caution. She agrees that having another place to get overnight shipping is a win for consumers, but there could still be challenges.
“I think that makes sense in theory, but whether or not they can make the economy work depends on the quality of the assortment and how many people actually use it. Also, I don’t know how easily it scales,” she says.