Wal-Mart Stores Inc. has been chipping away at Amazon’s delivery dominance, which includes free two-day delivery for Prime Members and a network of lockers and Instant Pickup locations. Besides free two-day delivery, Wal-Mart has launched delivery options such as a pickup discount and delivery by Wal-Mart associates. The Bentonville, Ark., giant’s latest salvo is the acquisition of Parcel, a technology-based, same-day, last-mile delivery program, revealed Tuesday.
“My team spends a lot of time thinking about ways we can make deliveries faster and more convenient, as consumer demand for speed, flexibility and reliability continue to grow,” said Nate Faust, senior vice president of Wal-Mart U.S.’s e-commerce supply chain. “Parcel is a proven leader in e-commerce package delivery, including taking fresh, frozen and perishable food the last mile — that is, the last step in the shipping process as products make their way from a fulfillment center to your door.”
Parcel, which specializes in perishable and non-perishable delivery to customers in New York, also provides services such as scheduled evening delivery and custom text message notifications.
“Our immediate plan is for Parcel to continue serving its existing clients and growing its customer base,” Faust said. “There’s a lot of upside. But I see even more upside for our own same-day deliveries. Jet has been testing free same-day delivery of certain orders to customers in New York City. We can build on that and we plan to leverage Parcel for last-mile delivery to customers in New York City, including same-day delivery for both general merchandise as well as fresh and frozen groceries from Wal-Mart and Jet.
“New York City is the top market for both Jet and Wal-Mart.com,” Faust said. “Because of the density of the area, along with the proximity of our fulfillment centers, it’s the perfect place for high-impact innovation. Parcel has developed unique expertise delivering to customers in a distinctly challenging and essential market. This acquisition allows us to continue testing ways to offer fast delivery while lowering our operating costs.”
Parcel, with its New York-centricity, is an interesting choice for Wal-Mart. After a long campaign to open stores in Manhattan in the early Aughts, Wal-Mart called it quits, deciding that the high rents and challenging logistics weren’t worth it. While the retailer operates stores in other boroughs, it still hasn’t opened any stores in Manhattan.
A Wal-Mart test in Silicon Valley involves bringing orders into a customer’s house and even unpacking perishables and putting them in the refrigerator. Delivery associates use a onetime passcode preauthorized by the client to opens a home’s smart lock. Shoppers get a smartphone notification when the delivery begins and can watch it unfold in real time.
Other retailers also are experimenting on various fronts. An innovation by Target Corp. geared to help consumers shop on their own terms was revealed Tuesday. Drive Up, for shoppers who are so rushed they don’t even want to go inside a store, is being tested in the Minneapolis-St. Paul area. Customers place an order using the Target app and selecting Drive Up. Target pings a shopper when their order is ready and customers click I’m on My Way, when they’re close to the store. Once parked in a designated Drive Up spot, a Target associate brings out the order.
It remains to be seen whether Amazon will brings new delivery options to Whole Foods, which it acquired in June. A report by Thasos Group, an alternative data intelligence company, found that foot traffic at Whole Foods rose 17 percent year-over-year during the week of Aug. 28, when a publicized price reduction started. As of the week ending Sept. 16, foot traffic decelerated to 4 percent year-over-year, which was still elevated when compared to the three weeks before to Aug. 28.
Since the price cuts, foot traffic has settled at a lower, but still elevated level, the report said, adding that Wal-Mart, Kroger, Costco and Target provided the most new customers to Whole Foods. “Trader Joe’s, Sprouts and Target saw the highest percentage of their customers defecting to Whole Foods,” the report said. “The price reductions were insufficient to attract new kinds of customers. Whole Foods’ new customers overwhelmingly belonged to the same upper-income demographic as the company’s traditional customer base. Defecting customers in the week of the price cuts came from the wealthiest segment of each competing store’s customer base.”