Wal-Mart Takes On Amazon With Grocery Delivery Service

Wal-Mart Stores Inc. (NYSE:WMT) has decided to directly challenge Amazon (NASDAQ:AMZN) in the grocery arena by adding store to door delivery service in select areas of the country. Before the start of its annual meeting on Friday, Wal-Mart announced that it will be forming a partnership with Uber and Lyft to deliver groceries ordered online to its customers’ homes. Wal-Mart’s chief operating officer of e-commerce, Michael Bender, said in a statement that the grocery delivery trials will begin in Phoenix and Denver within the next two weeks.

With the new grocery delivery service, customers will order their groceries online using the same process developed for the company’s curbside pickup service. Specially trained Walmart Personal Shoppers will fill the orders that are placed, selecting the best meat and produce available. Then, the store will contact Uber or Lyft for drivers to make the deliveries. Under the current plan, shoppers will pay a $7-to-$10 delivery charge to Wal-Mart for each delivery.

Wal-Mart began testing a grocery delivery program in March of this year with a pilot program in Miami. With that program, the company delivers Sam’s Club groceries to customers using Deliv. It also offers home delivery in San Jose, California.

The company has also expanded its online pickup service to 14 new markets for a total of 54 markets at about 200 stores. There are around 35,000 fresh groceries, dairy, meat, frozen foods, health and beauty products, baby items, and consumables available in Walmart’s online grocery store. Walmart claims that 90 percent of shoppers using the online grocery service are repeat customers.

Wal-Mart just posted its seventh consecutive quarter of rising comparable-store sales at Wal-Mart locations in the U.S. Those locations account for 62 percent of the company’s annual revenue. However, its e-commerce growth has slowed dramatically, rising 7 percent during the first quarter. That is a far cry from the nearly 30 percent growth it enjoyed two years ago.

In recent years, the company has been spending a lot of money on its stores and its staff. It’s now in the second year of a $2.7 billion investment in workers through training and higher wages. The company has also been revamping older stores and closing unprofitable ones. Wal-Mart recently announced that it would shutter 269 stores worldwide this year, with about half of those closures occurring in the U.S.