Walmart will begin offering free one-day shipping in certain cities this week, as it races against Amazon to promise ever-speedier deliveries.
The Bentonville, Ark.-based retailer said next-day deliveries will begin in Phoenix and Las Vegas on Tuesday, and will expand to Southern California a few days later. About 75 percent of the country will be eligible for the service by the end of the year, according to Marc Lore, president of Walmart U.S. eCommerce.
Executives say next-day shipping will be more efficient — and cheaper — than its current policy of two-day shipping, which Walmart put into place in 2017.
“Instead of shipping from multiple places in multiple boxes, we can consolidate everything into one box and ship it ground,” Janey Whiteside, Walmart’s chief customer officer, said in an interview. “This is not only good for customers, but it also makes good business sense."
Walmart’s announcement comes just weeks after Amazon said it would soon offer free, one-day shipping to Prime members, upending the two-day shipping model that has been the industry standard for over a decade. (Jeff Bezos, the founder and chief executive of Amazon, also owns The Washington Post.)
“We really think [one-day shipping is] going to be groundbreaking for Prime customers,” Brian Olsavsky, Amazon’s chief financial officer, said in an earnings call with Wall Street analysts last month. “We’re able to do this because we spent 20 plus years expanding our fulfillment and logistics network."
The dueling announcements from Walmart and Amazon, analysts say, illustrate the widening gulf between the country’s largest retailers, which can afford to spend billions on faster shipping, and the rest of their competitors.
Amazon last year spent $27.7 billion mailing its products around the world, a 27 percent increase from the year before. Walmart, meanwhile, has spent billions buying up e-commerce brands such as Jet.com, ModCloth and Bonobos in hopes of winning over a new generation of online shoppers. The retailer last year had $510 billion in annual revenue, more than three times Amazon’s $142 billion.
“This the next rung on the ladder for both Walmart and Amazon,” said Laura Kennedy, vice president of retail insights at Kantar. “Customers have made it clear that they expect this kind of convenience and immediacy.”
Amazon began offering free two-day delivery to Prime members in 2005. But in recent years Walmart and Target have caught up, with offers of free, two-day shipping on orders over $35. They have also begun using their stores to fulfill orders, as part of a growing push to encourage customers to buy online and pick up in store. (Beginning Tuesday, Target is expanding its Drive Up service to Washington-area stores, where shoppers will be able to place orders by app and pick them up in the store parking lot.)
Beginning this week, Walmart will offer next-day shipping on up to 220,000 items, including diapers, housewares and electronics. The company has created a stand-alone “shopping experience” on its website, where shoppers can browse through eligible items, all of which will ship from the same local warehouse. It will continue to use national and local carriers to deliver orders.
“Customers want shopping to be increasingly easier and convenient, whether that’s in the store, online or a combination of both,” Whiteside said.
But analysts said it was unclear whether the promise of next-day delivery would be enough to win over consumers. Research shows, they said, that shoppers consistently say free shipping, free returns and order tracking are more important than fast shipping.
“The amount of money it costs to execute a program like this, versus the value, I just don’t know that it’s worthwhile,” said Sucharita Kodali, an analyst for Forrester. “Will customers really think it’s so much greater to get something in 24 hours versus 48 hours? That remains to be seen.