Why Walmart Could Win Hyperlocal Delivery In The US

Retail Why Walmart Could Win Hyperlocal Delivery In The US Michelle Evans Contributor Opinions expressed by Forbes Contributors are their own. I write about how disruptive technologies will reshape commerce Following New! Follow this author to stay notified about their latest stories. Got it! Nov 7, 2022, 09:00am EST | Share to Facebook Share to Twitter Share to Linkedin Products that have been somewhat insulated from the rising tide of e-commerce are seeing an uptick in online orders.

Grocery e-commerce hit record highs in recent years. Even still, popular categories like staple foods, fresh foods and soft drinks have the greatest unmet e-commerce opportunity globally, according to Euromonitor International. But slow shipping is holding back the full potential of these categories.

Connected consumers point to longer than expected wait times as the most common delivery challenge, according to Euromonitor’s latest Voice of the Consumer: Digital Survey. Going forward, reducing this window—especially for food and beverage orders—will be critical to powering e-commerce growth. And while headlines have focused on quick commerce players and their VC-backed pocketbooks, large retailers like Walmart WMT shouldn’t be counted out.

Walmart holds a unique advantage over Amazon and other competitors in the last mile battle: a vast . . .

[+] store footprint. (AP Photo/Gene J. Puskar, File) Copyright 2019 The Associated Press.

All rights reserved. Battle for the last mile Winning the last mile has been a top retail trend for the past decade as the industry grapples with rising fulfillment costs as well as the environmental impact of such services. And different business models appeared to meet these evolving needs.

MORE FOR YOU $100M Magic: Why Bruno Mars And Other Stars Are Ditching Their Managers I’ve Played 30 Hours Of ‘Marvel Snap’ In One Week, Here’s Why Housing Solutions Series: Fairness, Efficiency, And More Supply Third-party startups like Instacart emerged to help retailers offer faster delivery whereby couriers pick up orders from physical stores. New Euromonitor estimates indicate that third-party delivery sales recorded an impressive 64% compound annual growth rate since 2017. But deliveries were still taking an hour or more, which laid the groundwork for ultrafast models.

Startups burst onto the scene with some promising orders in as little as 10 minutes. Weezy, Gorillas, Getir, Cajoo and goPuff received a windfall of venture capital over the last couple years. These companies own and operate distribution centers close to end-consumers to shorten delivering windows.

Competition in the on-demand delivery space is fierce, but the short-term outlook continues to worsen. The stage is set for an intense round of consolidation as larger, better-financed players snap up their smaller rivals or force them out of business. In the U.

S. , for example, the top-three third-party delivery players across retail and foodservice control almost 90% of the market, according to Euromonitor, up from 40% in 2017. Takeovers are perhaps most evident within the quick commerce market.

Turkish brand Getir is one example. In early October, Bloomberg reported that Getir was in advanced talks to buy rival Berlin-based Gorillas to expand in Europe. But this wasn’t a new page in the company’s playbook.

In 2021, Getir acquired Spanish player Blok and UK player Weezy to begin building its European footprint. Turkish quick commerce player Getir has acquired competitors like Blok and Weezy in 2021 to expand . .

. [+] its footprint in Europe. (Photo by Juan Carlos Rojas Rodriguez/Anadolu Agency via Getty Images) Anadolu Agency via Getty Images While the viability of such models remains up for debate, some of the world’s largest retailers aren’t sitting on the sidelines.

These companies have the resources and financial backing to potentially win. And Walmart is at the forefront of this movement in the U. S.

Walmart’s unique position Walmart sold $7. 3 billion of staple foods, fresh foods and soft drinks online through the first three quarters of the year, according to Euromonitor, capturing 30% of the U. S.

e-commerce market for these categories. To compare, Kroger KR and Amazon AMZN sold $3. 4 billion and $1.

8 billion, respectively. The retailer holds a unique advantage over Amazon and other competitors: a vast store footprint. With 4,700 locations, 90% of the U.

S. population is within 10 minutes of a store. Walmart is able to reach both high-density urban areas as well as more suburban and rural parts of the country.

And the retail giant has opened fulfillment centers and invested in automation across its supply chain to increase speed. Big merchants like Walmart also have deep pockets to build proprietary delivery infrastructure. In fact, one of Walmart’s more notable moves was pivoting its same-day logistics network into a new revenue stream.

In 2018, Walmart launched Spark, a service that uses independent contractors to pick up orders from U. S. stores for same-day delivery.

In 2021, these capabilities turned into a service called GoLocal, which now partners with U. S. retailers of all sizes, to offer delivery in as fast as 30 minutes.

Walmart is positioned to make fast delivery a reality at mass scale – an achievement that delivery platforms have struggled to do profitably. The primary purpose of Walmart’s stores remains in-person shopping, so it doesn’t have the added real estate cost unlike its quick commerce competitors. Stores also serve as nodes across a complex distribution network, enabling both delivery and even collection options.

Walmart reports about one-quarter of e-commerce orders are fulfilled through click and collect, which offsets the more costly delivery model. In the U. S.

, click-and-collect services continue to outpace the growth of delivery as a fulfillment model, according to Euromonitor. Unlocking e-commerce growth of impulse-driven categories is one of many structural shifts unfolding in retail. As delivery windows shrink, consumers could turn to the online channel to shop in the moment, which will open the door to new ways of selling and marketing.

Walmart is the closest to making this a reality for the American shopper. Follow me on Twitter or LinkedIn . Check out my website .

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