Walmart explains why it offers fewer items for next-day delivery compared to Amazon
The retail giant announced last month it was offering next-day delivery — with no membership fee — for about 220,000 items on its website to customers in Phoenix and Las Vegas first, with plans to expand to reach about 75 percent of U.S. customers by the end of the year. Walmart said it also plans to add hundreds of thousands of items for next-day delivery in the future.
Walmart’s speedy delivery is only available for a small pool of items compared to Amazon, which announced last week that Prime members — who pay a yearly membership fee of $119 — will be eligible for free one-day delivery on more than 10 million products.
Despite the large difference, it seems like Walmart isn’t rushing to match Amazon’s next-day delivery. Walmart e-commerce CEO Marc Lore said Friday at the company’s annual shareholders meeting in Bentonville, Arkansas that it would be too expensive to offer next-day delivery for all of its products.
“Certainly we think the breadth of assortment is critical,” Lore said in response to a question. “…We think that offering now the 200,000, but growing to hundreds of thousands more represents a really high percentage of sales done. And if we can offer that next-day experience in a consistent way with no membership fees we think that’s a very compelling value proposition.”
Lore said it’s a “trade-off” to offer fewer items for next-day delivery.
“After you get past the top, let’s say, hundreds of thousands, or top million SKUs, with overnight or next-day delivery, it gets exponentially more expensive,” Lore said.
“There’s a limited pool of dollars and you have to decide where to invest in the value prop,” Lore added. “Do you invest beyond the top 80 percent of sales? Do you go for speed there? Or do you take those dollars and put it into same-day delivery of grocery?”
Walmart announced Friday it was taking its same-day grocery delivery a step further by giving customers the option to have an associate place the groceries in their refrigerator when they’re not home. The retailer said the service, called InHome Delivery, will be rolled out this fall for more than one million customers in Pittsburgh, Kansas City, Missouri and Vero Beach, Florida.
Meanwhile, Amazon said it began offering one-day shipping on a trove of products in April and will continue adding millions of items, but the exact date of the complete rollout of its delivery plan was not revealed. Prime members aren’t required to meet a minimum purchase amount for the new next-day delivery option. Amazon previously offered one-day shipping on select items and free same-day delivery for those whose orders were $35 or more.
Walmart customers have to meet a $35 minimum on purchases to qualify for next-day delivery.