In an effort to better serve customers’ needs for quicker and easier delivery of product, Walmart is testing two “last mile” delivery options that are worth reviewing. Addressing the last mile delivery option and better competing with Amazon is of the up most importance to Walmart. Magid’s Retail Pulse study revealed that the 30% of Walmart’s customers who have used online options for grocery are both younger and spend more with Walmart than those that haven’t used online for grocery. Walmart has to stay relevant to these online customers in its arm race with Amazon.
The first concept that Walmart is testing is a pickup kiosk in Oklahoma City that will allow for automated grocery pickup. The second, and more widely publicized effort, is based around Walmart employees delivering product directly to customers.
While you have to admire Walmart’s tenacity to test various options in its relentless desire to win back online customers from Amazon, one of these pilots is doomed from the start while the other holds several key ingredients that could prove to be a winner.
Looking at the pickup kiosk, which allows customers to pick up online orders without having to go into the store, it’s hard to figure out how this compares favorably to Amazon Prime and Prime Now. According to Magid’s Retail Pulse study, 43% of Walmart’s regular customers subscribe to Amazon Prime and 14% utilize Prime Now, revealing the significant threat Amazon represents.
The success of Prime and Prime Now are based on speed and convenience. While the Walmart test kiosk does offer a marginal improvement over the in-store pick up option, getting in the car and driving to an unmanned kiosk feels like Walmart playing to all of Amazon’s advantages and very little of its own strength.
If convenience is the driving factor, it’s hard to believe an online shopper will take the additional step of driving to an impersonal kiosk rather than just having their order delivered straight to their home.
The weaknesses of the Oklahoma test kiosk lead to the second test with Walmart employees delivering product, currently being tested in Arkansas and New Jersey. In its desire to win the last mile delivery race, Amazon has utilized a multitude of delivery options with few of them delivering much in the way of a consistent branded approach.
One advantage of a brick and mortar player like Walmart is that within their store associates, they have a unified and branded local workforce that can potentially be utilized to deliver products to customers. The obvious logistical advantage of using store associates is that they are already at that store versus Amazon’s delivery drivers who have to travel first to a fulfillment center and then to the customer.
The second, and far more important advantage for Walmart, is the local and personal connection that can be generated from a Walmart employee coming to your front door. The Walmart employee has much more invested in the company than the Amazon delivery person, resulting in the potential for a much richer experience with their local community. By interacting directly with the local consumer, Walmart provides a familiar face to the product whereas Amazon remains a distant, impersonal figure.
Both delivery options reveal that Walmart is not afraid to take risks in its battle with Amazon and has embraced the aggressive style of Jet.com founder Marc Lore and his desire to remake the world of retail.