Walmart is reportedly beginning a membership fee system for its grocery delivery service. The mega-retailer joins other grocers is offering a flat fee option for unlimited deliveries. Online grocery ordering has become a hotly contested service within the already highly competitive grocery vertical.
This industry operates on razor thin net margins and developing online ordering fulfillment is quite costly. Amazon Prime has successfully demonstrated a price point that consumers are willing to pay, so competitors have been following suit with their own delivery programs.
The big online grocers compete on convenience and delivery speed, but need fees to cover the costs of order picking and fulfillment. Whether the online grocery channel turns out to be even slightly profitable remains to be seen. Right now, it’s likely to be a loss leader, but a necessary service for the big grocers to offer shoppers in order to stay competitive.
A Grocery Dive article discusses more on this topic which is excerpted below.
- Walmart is now offering an unlimited grocery delivery plan for shoppers, according to TechCrunch. Delivery Unlimited is available for $98 a year or $12.95 a month and includes the full assortment of grocery products. There is a $30 minimum for all Walmart Grocery orders.
- It’s unclear when Walmart began piloting Delivery Unlimited and how many markets currently offer it. Grocery Dive has reached out to Walmart for details but had not heard back as of press time.
- Delivery Unlimited is a third grocery e-commerce buying option offered by Walmart. Shoppers can pick up orders for free at nearly 3,000 stores or pay $9.95 per order for delivery from around 1,000 locations. To promote its new unlimited service, Walmart is offering a free 15-day trial in markets where it’s available, according to TechCrunch.
Overview by Raymond Pucci, Director, Merchant Service at Mercator Advisory Group
