Amazon Prime Now has been delivering groceries (either direct from Amazon or on behalf of selected supermarket chains) in a number of cities in Europe and North America.
With its Whole Foods purchase, Amazon acquired a national supermarket chain and a retail footprint. We’ve already seen how the retail footprint has been integrated with parcel lockers and the benefits that this proximity to its customers brings.
Amazon Prime Now has been integrated with Whole Foods and is being rolled out to major cities across the USA. Prime members in Los Angeles are the latest to benefit…. and this is only the beginning.
On the face of it, Instacart is the big loser in this deal. Whole Foods was an early investor in the home delivery platform Instacart and a large client. But plenty of Amazon/Whole Foods’ rivals (including Aldi) are teaming up with Instacart to offer home delivery. This would seem to make the fight more balanced.
Walmart had to act now
So why is Walmart suddenly moving so fast in this space? We believe that they couldn’t simply stand by while Amazon encroaches on their turf via its Whole Foods subsidiary. Even with great click-and-collect options, Walmart must be able to offer a competitive “to door” deal for its customers if it is to compete with the “Big A”.
Perhaps the only surprise was that Walmart didn’t go with Instacart, which is already handling deliveries for Walmart’s Sam’s Club membership warehouse club. This is probably due to operational capability (including coverage) or commercial issues.
So how will the new Walmart-Postmates partnership work? Walmart will continue to use its “personal shoppers” to pick customer orders at the local store and Postmates’ drivers will collect orders for delivery.
Why Postmates?
Postmates has good coverage with some 50 cities in the USA and is therefore a pretty good bet. With the demise of Uber Rush, and acquisition of Shipt by Target, there were fewer and fewer delivery partner options available to Walmart and so, if Walmart didn’t want to be left out in the cold it needed to secure a sensible delivery partnership… and fast.
Is a partnership the right thing for Walmart?
Could Walmart have set up its own delivery service? It could have copied the Amazon Flex model, or teamed with the US Postal Service (similar to how Carrefour has partnered with postal operators in Europe). But both these approaches would be time consuming and wouldn’t guarantee the quick fix that they need.
If you’d like our view on the potential outcome, it’s difficult to say, so we’ll take the safe route and say, it depends!
Will Walmart and Postmates be able to work out a coherent strategy and then be able to execute it effectively? Walmart and Postmates are leaders in their respective fields, but will they be able to integrate their offerings into a seamless and customer-centric offering? Remember what they’re up against: the laser-focused customer-centric behemoth called Amazon.
No matter who wins the arms race between Walmart and Amazon, it is clearly good news for the consignee both in terms of availability of last-mile services and avoidance of a potential monopoly situation with Amazon taking it all. In the meantime, let’s sit back and observe this battle of the giants… exciting times ahead!
Bio:
Ian Kerr is the founder and host of the Postal Hub Podcast, the weekly podcast for the postal and delivery sectors.
Marek Różycki is managing partner at Last Mile Experts, specializing in CEP and e-commerce last-mile advisory.
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