There are many hurdles Walmart and other large grocers face as they race to expand fresh-food delivery and gain an edge in one of the fastest-growing e-commerce segments, reports The Wall Street Journal (March 15, 2019). Despite Walmart’s resources and more than 1.5 million U.S. workers, it mainly relies on a patchwork of independent companies to expand its delivery services as quickly, broadly and cheaply as possible.
Walmart, the country’s biggest seller of groceries, is facing pressure to push forward in delivery because Amazon, a chief competitor, is making inroads in grocery sales. (Walmart generated $200 billion in U.S. grocery sales last year, more than double Kroger’s take and 5 times as much as Amazon’s in the sector). In recent years, Walmart added a service for placing online grocery orders for parking-lot pickup at 2,100 of its 4,650 U.S. stores. About 35,000 U.S. Walmart employees called “pickers” now weave through aisles compiling online grocery orders– a slower and more costly process than fulfillment from specialized distribution centers.
Walmart is offering delivery from 800 stores, with another 800 planned this year, mostly by joining with firms like DoorDash that crowdsource drivers. Walmart pays a fee to the driving companies and charges customers $8-$10 per order to offset that cost. But filling online orders with store workers in spaces organized for shoppers can be complex and expensive. And drivers for delivery firms need an incentive to lug bulky grocery orders from their cars to customers’ doorsteps. Walmart is testing using its own store workers to make deliveries. And last year, it began arming workers with devices that tell them the fastest route through stores and the optimal order to place items into bags. Future remodels could tweak stores to better accommodate online ordering.
Classroom discussion questions:
- What are Walmart’s core competencies (see Chapter 2) as they relate to food delivery?
- What are its key success factors (KSF’s)?