Walmart launches free one-day online shipping, in challenge to Amazon
Walmart is joining the race to make one-day shipping the new e-commerce standard.
Amazon last month announced plans to upgrade its Prime membership program in the US from two-day shipping to just one day. Not looking for Amazon to hog all the attention, Walmart on Monday unveiled its own plans to provide one-day shipping. Walmart had hinted that this effort was in the works soon after Amazon’s announcement.
While Amazon plans to build up its one-day shipping capacity over the course of this year, Walmart started offering it new ‘NextDay’ perk immediately, but only in Phoenix and Las Vegas and with a limited inventory of up to 220,000 items. Southern California is coming on board in a few days. By year’s end, Walmart expects to reach about 75% of the US population.
There’s one more very big difference between these competing programs: Amazon’s requires a $119 annual membership, while Walmart’s is free, so long as orders are $35 or more.
‘We feel good about where we are and where we’re going,’ Marc Lore, Walmart’s head of US e-commerce, said in an interview. ‘We’re expecting, based on research, customers to really appreciate the upgrade here.’
Walmart’s move could force other retailers to start offering more one-day and same-day shipping to keep up, providing shoppers with more choices and faster shipping times. The move could also put more pressure on Amazon and make it harder for the company to raise the annual price of Prime.
The new one-day shipping program continues Walmart’s aggressive push to be a stronger online competitor to Amazon, after it seemed to ignore e-commerce for years, allowing Amazon to balloon into the juggernaut it is today. Walmart bolstered its online capabilities with the purchase of Jet in 2016 and a majority of India’s Flipkart last year. It also added free two-day shipping two years ago and has been expanding its grocery pickup and delivery services. It’s even started a crowdsourced operation called Spark Delivery, a rival to Amazon’s similar Flex business.
Now Walmart’s e-commerce sales are growing faster than Amazon’s, albeit from a far smaller base.
‘It’s King Kong versus Godzilla. These guys are really duking it out,’ said Forrester analyst Sucharita Kodali.
Amazon, DoorDash, Uber Eats and Postmates, she said, are all helping raise customer expectations for faster shipping times, making it more likely that one-day shipping will become the norm. However, she’s not sure if that change will last.
‘I question whether it’s sustainable in the long run,’ Kodali added. ‘How cost-effective is this going to be for them?’
Walmart says its one-day shipping actually costs it less than two-day, since orders come from a single warehouse that’s located close to customers, letting Walmart deliver in just one box and using inexpensive ground shipping.
Charlie O’Shea, a Moody’s analyst, said he expects Walmart will continue using its over 5,000 US stores as a big advantage against Amazon to power its shipping services and provide same-day pickup. As a way of narrowing that gap, Amazon in 2017 bought Whole Foods, which has 500 stores.
The one-day inventory at Walmart will focus on the most popular online items, like diapers, electronics and laundry detergent, as well as stuff that’s tailored to each city served, like suntan lotion in Phoenix. The inventory of up to 220,000 items is still tiny compared with the 75 million items Walmart sells online and far fewer than the hundreds of millions of items Amazon sells.
A typical cutoff time to get one-day shipping will be 3 p.m. local time, but it will vary by location and in some cases will be in the late evening, Lore said.
‘It’s going to be a very convenient experience, very predictable, reliable, and we think it’s a very significant step change,’ he said.