Walmart Lays the Foundation
One month ago, Deutsche Bank upgraded Walmart’s stock from hold to buy. The reason being, that they expect Walmart to overtake Amazon as the leading online grocer in the United States. Deutsche notes that Walmart is “reaping returns on the many years of investment in e-commerce and customer service,” with that growth being positioned to continue accelerating. By 2025 Deutsche Bank expects Walmart and Amazon to increase online grocery sales to more than $25 billion each. In 2017 Walmart introduced free two-day delivery and added hundreds of stores as pick-up locations. Now, Walmart is collecting the check on their investment into e-commerce.
A survey from Retail Feedback Group shows that Walmart has overtaken Amazon as the online grocery-shopper’s preferred method of buying their perishables. David Bishop, a partner at strategic advisory firm Brick Meets Click, says that “Selling perishable products online is really challenging to penetrate if your brand isn’t associated with ‘fresh’ in some way. It’s also more complex and costly if fulfillment depends on a ship-to-home method, such as two-day shipping.”
“If Amazon is to fulfill its desired role, it needs to get physically closer to customers and persuade them to buy highly-perishable products from them,” Bishop added.That displays a clear advantage that Walmart has over Amazon when it comes to selling perishables online. More people trust Walmart than Amazon when it comes to purchasing fruit, vegetables, etc.
The Retail Feedback Group survey was also given out at the end of 2017; it showed that Amazon was the favorite by being 36% of online shopper’s preferred method. As of the end of Q4 2018 Walmart makes up 33% to Amazon’s 31% preferability. All of this is thanks to the effort Walmart has put to expand the number of store pick-up locations.
As of the end of Q4 2018 they have more than 2,000 stores with 1,000 more expected to open up by the end of 2019. Delivery services, such as DoorDash Inc. and Deliv, also work with Walmart to give customers the option of having their groceries delivered to their homes for an added fee. Amazon, in comparison, only has delivery from Whole Foods Market for its Amazon Prime customers in 60 cities, and in-store pickup only available at 10. It’s a physical vs. digital battle, and physical might just come out on top. This is due to Walmart’s large number of store pick-up locations. The added option of being able to just go out and pick up your groceries after ordering them is an added convenience that is very attractive to potential customers. Adding onto that, Walmart has plans to open up a high-tech grocery distribution center that will move 40% more fresh and frozen groceries than the usual Walmart distribution center. Walmart is also partnering with Postmates to affect even more US households Spring 2019. Depending on the success of these ventures Walmart can advance even more rapidly to overtake Amazon faster than expected.