Pointing to impact of COVID-19, Walmart rolls out new Express Delivery service offering

Even though there are some signs that the United States economy is slowly showing signs of fully reopening, amid the ongoing COVID-19 pandemic, that does not change the fact that majority of us, still remain home sheltering-in-place and also practicing social distancing as well.

But, while we are largely at home, it, by no means, suggests that nothing on the economic front is happening either. To be sure, e-commerce activity, during these unusual and uncertain times, remains very active, as evidenced by the flurry of residential deliveries we see all the time just about everywhere, it seems.

With that as a background, last week, I came across a press release from retail giant Walmart heralding a new service, entitled Express Delivery, which aims to deliver items ordered from its stores to the doorsteps of its customers in less than two hours.

Company officials explained the plans for Express Delivery, which offers delivery options for more than 160,000 items from the company’s food, consumables, and general merchandise offerings, were “accelerated in the wake of the coronavirus,” with the service going through a pilot program in 100 Walmart stores going back to mid-April, with plans for it to expand to almost 1,000  stores early this month and then in almost 2,000 stores in the weeks following.

That is a fast rollout.  And Janey Whiteside, Walmart chief customer, noted that in a statement.

“We know our customers’ lives have changed during this pandemic, and so has the way they shop,” she said. “We also know when we come out of this, customers will be busier than ever, and sometimes that will call for needing supplies in a hurry. COVID-19 has prompted us to launch Express Delivery even faster so that we’re here for our customers today and in the future.”

As for some key specifics of the new Walmart Express Delivery service, the company said, that, like its pickup and delivery offerings, each are considered “no-contact” customer services, with items picked by Walmart’s squad of 74,000 personal shoppers, as well as those its has hired for Express Delivery. This service, which comes with a $10 price tag that is on top of Walmart’s existing delivery charge, with Walmart’s Delivery United customers paying a $10 fee per Express Delivery. The company also touted how Express Delivery is building on the existing inventory of pickup and delivery slots that are available to customers. Delivery United customers pay a $12.95 monthly fee or a $98 annual fee.

An analysis of the new Walmart Express Delivery offering provided to LM by Karl Wheeler, senior consultant, professional services, for San Diego-based parcel consultancy Shipware LLC, provided some interesting takeaways.

Wheeler noted that Walmart’s announcement of two- hour delivery is a demand-inspired attempt to capitalize on the COVID-19 shop from home trends.

“For consumers opting for the 2 hour delivery service option it will add  $10 to the existing $7.95 -$9.95 same day grocery delivery fee. The service will be delivered by current  partners with Instacart.com and Roadie.com among the more well publicized partnerships,” he said. “The $10 additional fee is likely an acknowledgement to the increased costs for same day grocery delivery. As recent as February, Skipcart canceled its delivery partnership with Wal-Mart. The CEO, Ben Jones, was quoted in Bloomberg saying: ‘The grocery model does not work. It doesn’t work today, and it’s not going work six months from now. We’re all losing money.”

Wheeler added that it should also be noted that last October Walmart filed for two patents on drone delivery systems, saying that the wide-spread adoption of such systems would dramatically reduce costs and be a game changer.

Jerry Hempstead, president of Hempstead Consulting, explained that while it is not entirely surprising this offering was rolled out, it should not be necessarily viewed as vital or essential. 

“I can’t imagine the storage boxes for trading cards was urgent,” he quipped. “People would make the intelligent decision and choose ‘free.’ I have been saying this for years: ‘do we really need next-day delivery on all this stuff from Amazon [and other retailers], or would you be ok with two, three or four days?’

The vast majority of orders are not needed next day. It’s a marketing thing for [retailers] right now because of the virus and everyone getting their stuff via Amazon and others. They have not yet grown into that new normal. I do predict orders will drop dramatically when we are let back out of our cages.

I do think that Amazon was on the way to taking over the world and killing retail stores. The virus will prove that the reality of the inevitable was sped up.”

Regardless of the urgency or actual need, this movement of quicker and quicker e-commerce delivery turnaround is not going away anytime soon, to say the least. This move by Walmart, which was spurred on by the COVID-19 pandemic, and the need to better compete and keep up with Amazon, clearly shows that.