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Walmart Extends Grocery Home Delivery Experiment

Volume 2, Issue 6
March 31st, 2014
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Walmart announced that it is growing its purchase program called Walmart to Go that gives shoppers the option of placing an order online and picking it up at a nearby store for free, or arranging for it to be delivered at home for a small fee.

The giant retailer began the experiment domestically in 2011 in San Francisco and San Jose, CA, and last October expanded it to Denver.

Walmart is competing with Amazon.com, which began the AmazonFresh grocery delivery program in 2008 in its hometown of Seattle, and expanded it last year to Los Angeles and San Francisco.

Companies that have made a success of grocery home deliveries include FreshDirect in New York City and Peapod, which is owned by Royal Ahold, the parent company of the Giant Food and Stop & Shop supermarket chains.

The concept of grocery home delivery exploded during the Internet boom of the late 1990s but later almost disappeared when the bubble burst, taking with it a plethora of startups, and the $1.1 billion invested in Louis Border’s Webvan, which built enormous distribution centers around the country before it went bankrupt in 2001.

This is probably why Amazon and Walmart have embraced a go-slow approach. An advantage Walmart has is that it already has exploited its extensive network of bricks-and-mortar stores to become the biggest grocer in the U.S.

Walmart appears to be committed to the home delivery/store pickup program, particularly following last year’s disappointing store sales in the U.S. Also spurring growth is burgeoning consumer confidence in using Smartphones for purchases.

Walmart also has plans to significantly expand its Superama grocery home delivery service in Mexico. In Britain the company already owns a subsidiary called Asda that now operates the second-largest grocery delivery business in that country.

However, Walmart’s Global Ecommerce President Neil Ashe said recently the concept isn’t ready for a big rollout here because the U.S. doesn’t have doesn’t have the same customer density as Britain.

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