Walmart+ launches subscription grocery delivery service
Flexing its strength in the digital channel, Walmart unveiled a new $98 annual subscription service Sept. 1 that provides unlimited free delivery of groceries and other merchandise from 4,700 stores.
The service will be available beginning Sept. 15, according to a news release.
The much-anticipated announcement by the world’s largest retailer was made about two weeks after it reported e-commerce sales for the quarter ending July 31 were up a whopping 97% and comparative same-store sales were up 9.3% compared with year-ago levels.
The Amazon Prime e-commerce subscription service, now priced at $119 per year, began in 2005 and now has more than 150 million members worldwide, including an estimated 55% of U.S. consumers in 2019, according to one independent estimate.
Walmart’s new delivery service could make significant inroads in e-commerce, particularly in food, said Craig Carlson, president of Chicago-based Carlson Produce Consulting. Grocery represents about 56% of Walmart sales, according to analysts quoted by CNN.
Because Walmart has more than 4,000 physical stores compared with about 450 stores for Amazon/Whole Foods, Walmart has a huge advantage in terms of access to their customers, Carlson said. While Amazon is starting to add stores, it is playing catchup to Walmart.
Nine out of ten Americans live within 10 miles of a Walmart, according to the company.
According to the Coresight Research U.S. Online Grocery Survey 2020, U.S. online grocery sales grew 22% in 2019 are expected to rise 40% in 2020. The Coresight report said e-commerce accounted for about 2.6% of U.S. food and beverage retail sales in 2019 and will grow to 3.5% this year.
With the Walmart+ service (minimum $30 order), the company offers subscribers:
- Unlimited free delivery: In-store prices as soon as same-day on more than 160,000 items, including groceries;
- Scan & Go: Unlock Scan & Go in the Walmart app: Customers can scan their items as they shop and pay using Walmart Pay, giving a touch-free payment; and
- Fuel discounts: Up 5 cents a gallon discounts at nearly 2,000 Walmart, Murphy USA and Murphy Express fuel stations.
Staying power
It is speculation if current online grocery customers will remain so after the COVID-19 pandemic eases.
Steve Lutz, senior vice president of insights and innovation with Idaho Falls-based Category Partners LLC, said the firm at the beginning stages of researching how much online shopping habits will stick with consumers after COVID-19.
Lutz said recent surveys by Category Partners indicate about 30% of consumers buy at least some food online. For those who buy produce through online channels, about 39% said they started buying online before COVID-19 and 58% said they started online buying after COVID-19 began.
“You had the emergence of COVID-19, which totally change the equation,” he said. “You have this huge adoption rate (for online grocery) that was based on consumers looking for convenience, looking for avoidance because of health concerns, which really ratcheted up the engagement.”
Lutz said Category Partners is beginning a study that will examine the experience consumers have had in purchasing produce online.
“What are they seeing relative to selection, and pricing, and quality and availability?” Lutz asked.
Experiences with online produce may determine if they remain online grocery customers.
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