Walmart is about to take a major shot across the bow of Amazon with a new grocery delivery service that will use drivers from the Uber and Lyft ridesharing services. It's a direct hit at Amazon and a prime example of the new competitive landscape for last-mile fulfillment, not to mention one of the latest moves in Walmart CEO Doug McMillon's bid to reinvent the company.
The retailer is expected to discuss an initial pilot project for the grocery service during its annual shareholder meeting later this week, as the Wall Street Journal reports:
Last-mile delivery has proved a hotly contested battleground. Dozens of startups like Instacart Inc. and DoorDash Inc., the U.S. Postal Service, Uber and Amazon are all vying for accounts with retailers, restaurants and grocery stores to bring goods to people’s homes.
Walmart has also started testing a similar service at its warehouse chain Sam’s Club in Miami using Deliv Inc., a startup that handles same-day deliveries for Kohl’s Corp., Macy’s Inc. and other retailers.
Under the pilot program with Uber and Lyft, a shopper can place a grocery order online and then Walmart employees will select the merchandise and package the order.
Walmart will then hail an Uber or Lyft driver to pick up the order and deliver it to the customer’s location. The delivery will cost $7 to $10, and customers will pay Wal-Mart, not the drivers.
Walmart declined to comment on why it is working with rival delivery companies for the grocery test. “We’ll start small and let our customers guide us, but testing new things like last-mile delivery allow us to better evaluate the various ways we can best serve our customers,” said Michael Bender, chief operating officer of Walmart Global eCommerce.
Analysis: Last-Mile Fulfillment Is Becoming Table Stakes for Your Brand
There's a challenge ahead here for Walmart, notes Constellation Research VP and principal analyst Dr. Natalie Petouhoff.
"As with all types of services, unless the customer experience is reliable, consistent and excellent, then this will be yet another attempt, but will ultimately fail," she says. "This is a great case where customer service is the new marketing. If the service is bad, word of mouth will spread and that’s the 'marketing messaging' others will get, and they won’t bother trying the service. We are truly in an as-a-service economy."
Walmart's use of third parties such as Lyft and Uber to fulfill last-mile orders, rather than its own fleet, raises interesting questions about how it can ensure that quality experience for grocery customers.
"Proper hiring, training and retention are even more paramount for the success of retail," notes a recent Constellation report lead-authored by Constellation Research VP and principal analyst Holger Mueller. "Extend this to other consumer touch points such as the warehouse employee who is packing a product for delivery or the worker doing last-mile fulfillment. It’s clear that workers of all kinds will have the responsibility of being true brand ambassadors. As retail shifts when it comes to fulfillment and interaction with the consumer, workers must be properly vetted and trained to ensure the brand is represented in the best light possible."
(Download an excerpt of the report, The Future of Retail Shapes People Management, at this link.)
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