SAME DAY DELIVERY:
Walmart has been in competition with the large online retailer of Amazon for a few years now. This includes price competition, product availability, and other services to attract customers. In a new service called Walmart To-Go, customers may purchase a product available on Walmart’s website and chose to have this product shipped and delivered to their household in the same day for $10; as long as the following conditions are met:
- The product must be purchased online before noon
- Does not include shoes, apparel, or grocery items
- And is currently only available in a few select trial cities, Minneapolis, San Jose, San Francisco, and Northern Virginia
This compares to a similar service that Amazon provides; however, the select cities are different and it is only for a cost of $8.99 compared to Walmart’s $10. Walmart’s fee is firm, no matter the size or price of the product while Amazon has an extra $0.99 charge for each additional item. Amazon’s service also is effective only if the product is purchased within a window prior to noon. According to the retail strategist, Al Sambar, “it can be three to four times the cost for the retailers to pick items and pack them versus a distribution center.” However, Walmart can take the risk because the corporation currently has the free cash flow to experiment with this service. As a shipping service, Walmart will use United Parcel Service to deliver their products on the same day, as long as they are purchased before noon.
Along with the same day delivery service, the article also discusses that Walmart has been matching the prices of products in their stores with ones found on Amazon. And according to the corporate policy of Walmart, they do not match prices of competitors. However some stores may not uphold this policy consistently. This technique has been done under the table, and executives are in discussion to possibly changing this price competing policy in the near future, possibly closer to the holiday season.
So in the end, who has the competitive advantage providing a same day delivery service? Walmart has a network of thousands of stores to check availability of a certain product and has the free cash flow to experiment with such a service while Amazon “has years of customer data at its disposal.” Amazon is solely an online retailer and has revolutionized their logistics and website, while Walmart is making strong efforts to compete in e-commerce. How might Amazon respond to Walmart’s move to match their same day delivery service? With the up coming holiday season, how many will choose to utilize one of these services?
Wall Street Journal Article: