Having introduced free two-day shipping two years ago, Walmart is adding free next-day delivery on a range of general merchandise products from Walmart.com.
Launch follows on from Amazon’s one-day shipping change for Prime members
The launch of this new service aligns with the growing focus on reducing fulfilment lead times, with Amazon recently announcing that it would move to one-day shipping for its Prime members. Walmart has made significant investments over recent years to reduce shipping times. It has introduced free same-day pickup from stores, including rolling-out Pickup Towers to enhance the customer experience. It is also on-track to offer grocery same-day pickup from 3,100 stores and same-day grocery delivery from 1,600 stores by the end of the year.
Aiming to reach 75% of US population by end of the year
The new next-day service will initially be made available to Walmart.com customers in Phoenix, Las Vegas and Southern California. Customers will be able to select the service across a range of 220,000 of the most frequently purchased items, providing they spend $35 or more. The retailer is aiming to reach around 75% of the US population by the end of the year through launching the service in 40 of top 50 major markets.
Lowering fulfillment costs
As Walmart will be fulfilling orders from a single distribution centre, the costs associated with this will fall. Fewer boxes will be sent via ground shipping, compared to existing online orders which are often shipped from multiple locations. Walmart also stresses that it is offering this service without the requirement of an annual membership fee.
Challenging the wider retail industry
The changes which Walmart and Amazon are making to their shipping programs will pressurise other retailers to respond, particularly as one-day free shipping starts to become the norm. Retailers will need to look at their existing fulfillment models and potentially adapt them to offer a similar service in a cost-effective way. We expect to see automation play a key role in driving down costs. As major retailers start to approach range and pricing parity, future differentiation will be driven through other aspects such as shipping times, fees and ease of processing returns. Expect to see retailers focus more closely on these areas.
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