An Order at Your Door Faster Than You Can Say “Same-Day”

by Adam on October 11, 2012

In case you didn’t hear the news, or otherwise are a ravenous internet shopaholic who sees the need to have fuzzy bunny slippers delivered in a window shorter than 24-hours, Walmart announced yesterday that it will begin offering same-day delivery for online orders. For a mere $10 per order (regardless of order size, so bunny slippers or refrigerator, the price is the same), customers have the luxury of ordering something in the morning and theoretically having it before dinner.

Your move, Amazon.

I suppose it should come as no surprise that vendors, pundits, consumers, and other retailers are looking at two industry behemoths and wondering who will win the same-day shipping “wars.” After Walmart’s recent announcement that they will no longer be selling Amazon Kindles, it’s quite clear that they are positioning themselves directly opposite the largest online retailer in the country. And for good reason, especially when one considers that Amazon has a vested interest in seeing Walmart (and other big-box retailers) go out of business. I would wonder what the motivation was behind a Walmart-Amazon partnership in the first place on the level of selling Kindles in-store (harkens back to Borders in some slight ways, doesn’t it?).

The obvious advantage that Walmart has in this fight is its 4,000 stores across the country. With the right logistics in place, they could theoretically expand the same-day markets they serve “overnight.” Amazon, on the other hand, has something like 30 or so distribution centers throughout the country. But, for Walmart, this will also mean figuring out how to service those orders without driving up costs significantly (and indeed, the article says that it can cost up to 4x more for a same-day Walmart order to be filled as an Amazon order). The other advantage is not really a new innovation, but Walmart’s strategic brick-and-mortar positioning also means that they can offer consumers a variety of pick-up options as well, which translates to greater customer service and flexibility.

Secondarily, in the online space, Amazon and Walmart are quite well-matched. The online experience at Amazon is certainly touted as a gold standard, though Walmart brings significant technical know-how to the table in terms of searchability and product discovery. Add to that the audience that Walmart commands in terms of online traffic (60 million uniques/month to Amazon’s 98 million), although they will have to do more to continue to keep up with and compete with Amazon’s numbers.

Lastly, my feeling is that Walmart’s most significant advantage over Amazon may be the ability to drive profit margins more adeptly (assuming they can figure out the shipping logistics for same-day). One only has to compare the financial statements of Walmart and Amazon (even though AMZN is valued at ~$240 and WMT is ~$75) to see that Walmart is in a much better position financially to invest in and capitalize on this portion of their business, and balance it with the brick-and-mortar segments that are making money.

Ultimately, having another dog in this fight, one with the money and consumer clout to command marketshare, is a good thing for consumers, vendors and other retailers.

**I’ll get into the ideological issues behind same-day delivery and how it feeds consumer psychology around a needs-based economy later.

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