How is Walmart expanding grocery ordering service?
Online grocery order and pick-up market is still quite young and kind of an uncharted territory. Walmart has one of the biggest brick-and-mortar presences in the country, so there is little surprise that the retail giant is quickly taking over the online grocery market too.
By the end of 2019, Walmart will have curbside pick-up at over 3,000 stores and will offer home delivery to 50% of all American population. 3,000 pick-up locations service 80% of our population. Given these numbers, it’s easy to see why the closets online grocery delivery competitor, Instancart, is way behind.
What many of us don’t realize is that online grocery buying customers are very loyal to the retailers that offer this service. It’s kind of like this – if you start experimenting with this service at Walmart, you are very likely to stay with Walmart.
This is why all the big retailers are trying to get our attention and get it right the first time. Walmart has a huge advantage so far, as it moved really fast and left Amazon in a much lesser and slower position.
How do new customers join online grocery?
Walmart has long been the largest discount retailer not just in the US, but worldwide. It has made a swift move to online as soon as the industry started turning that way. This move garnered Walmart new customer base, often wealthier and younger than its usual clientele from the past. One question still remains – will this influx of new people translate into extra sales of non-grocery products.
- $10 OFF First Grocery Pickup
- Free Delivery on Grocery Order over $50
Is grocery ordering very profitable?
Walmart will benefit only if those new customers will start buying more non-perishable products from the retailer. Otherwise it will be virtually no margin gain as groceries have very small profit margins to begin this. In any case, Walmart might not make much more money, but it will at least not lose consumers in the process that is happening everywhere, but instead gain new ones.
How is Walmart competition coping?
Target is probably the closest rival, but it’s lagging behind Walmart in grocery ordering. Target acquired same-day delivery service Shipt in 2017 and immediately offered this service at all locations. However, the service comes with a fee, while Walmart curbside pick-up is free.
Amazon is even slower with its grocery delivery from Whole Foods. There are only 10% of physical store locations if compared with Walmart and not all of them support delivery and pick-up.
Given this competitor situation it’s only natural that Walmart is growing fast and acquiring new customers. The loyalty factor ensures that those new customers won’t be going anywhere else any time soon.
What is the future for this market?
While Walmart today is the leader in online grocery market, it’s still a minor player in the overall grocery market. Currently, only about 12% of all people have even tried ordering groceries online, according to research by Second Measure.
Economists expect the online grocery market to grow rapidly in the coming years without slowing down as more and more people will be trying the convenient way of shopping online. This means that competitors have plenty of time and opportunities to catch up with Walmart.
Amazon is very serious about this line of business and is thinking about a totally new network of grocery stores that would be focused and geared towards online orders and fulfilment. Knowing Amazon, we can expect serious business here and might soon see stores that will offer unprecedented customer experience versus Walmart who had to squeeze the delivery and curbside pick-up into already existing infrastructure, making it a lot less fine-tuned.