Even with 74,000 personal shoppers and its recently launched Express Delivery service, Walmart has faced challenges keeping up with demand as consumers escalate both their online ordering and their expectations for faster home delivery.
To ramp up capacity for same-day delivery, Walmart has struck a deal with Instacart to pilot home delivery in Los Angeles, San Francisco and San Diego, Calif. as well as Tulsa, Okla., according to CNBC.
Although this is the first working arrangement between Instacart and Walmart in the U.S., Walmart’s Canadian division launched a pilot with Instacart in Toronto and Winnipeg in September 2018, and rolled it out nationally 11 months later.
Instacart shoppers and drivers will not only deliver groceries — their traditional bailiwick — but also the wide range of home improvement, personal care, electronics and other product categories Walmart carries. Instacart already had expanded its delivery services into categories such as prescription medications and alcohol.
According to Instacart, demand for its delivery service shot up 300% year-over-year in the first month of the pandemic, requiring it to expand its community of in-store shoppers from 200,000 to 350,000.
For its part, Walmart saw its e-Commerce sales soar by 74% in fiscal Q1, which ended May 1, 2020, with the number of new customers using Walmart’s curbside pickup and home delivery increasing 4X since the start of stay-at-home orders. Insider Intelligence’s eMarketer forecasts that Walmart will grow its share of total U.S. e-Commerce to 5.8% in 2020, up from 4.7% in 2019.
As Walmart builds its e-Commerce business, the inevitable comparison with Amazon arises. Many analysts and observers see the Instacart alliance as a way for Walmart to shore up its competitive standing by leveraging its biggest asset — its physical stores.
“Walmart fired yet another salvo in its delivery arms race with Amazon through its expanded relationship with Instacart,” said Charlie O’Shea, a VP at Moody’s Investors Service in comments provided to Retail TouchPoints. “Walmart will continue to leverage more than 5,300 physical locations in the U.S., which is a compelling competitive advantage as it provides consumers with a same-day pickup option, [and] with same-day delivery augmenting this capability creating a very powerful one-two punch.”