Walmart Rollout of Next-Day Delivery Steps Up Pressure on Rivals

Galtero Lara
May 16, 2019

US retail giant Walmart announced Tuesday that it will provide customers with free next-day delivery covering hundreds of thousands of "most frequently purchased" items.

While Amazon will be spending a lot more on the whole thing, Walmart's expenses will be lower since it is going to roll out the initiative in only those locations which are close to the company's warehouses and hence the costs of shipping will be much lower. The NextDay delivery service will first launch for customers in Phoenix and Las Vegas. The discounter plans to roll out the service to 75% of the USA population by year-end. It will roll out gradually over the "coming months" with a goal of reaching about 75% of the major U.S. population in the next year.

When you shop on Walmart.com you will be able to access Next-Day delivery options on 220,000 of the most commonly purchased items.

While there is no membership fee, there is a minimum order amount-shoppers must spend $35 or more to qualify for free next day shipping. Walmart has also been expanding same-day grocery delivery service fulfilled from its stores for a fee of about $10. It is available on eligible orders of $35 or more, with the specific assortment varying by customer location.

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The announcement comes just two weeks after online behemoth Amazon said it's upgrading its free shipping option to Prime members who pay $119 a year to one-day delivery from two-day delivery. The U.S. business could see a drag on operating margins of 5 basis points on an annualized basis and 3 basis points for Walmart overall over a similar period if they follow Amazon's one-day shipping offer, the note says.

To have an online purchase delivered the next day, a customer visits Walmart.com and toggles into the next day delivery section of the site to view items that are eligible for free next day delivery. The company is also keen to point out this offer does not require a paid membership as is required for Amazon Prime. We're on track to offer Grocery Pickup from 3,100 stores and same-day Grocery Delivery from 1,600 stores by year-end, which will provide coverage to approximately 80% and 50% of the USA population, respectively.

Walmart says the new delivery program has been in the works for a while.

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