October 5, 2017

Walmart's Grocery Shopping and Pickup Service: Free for a $30 purchase, but will that last?

As someone who loves to cook and bake, I am following with great interest developments in the grocery and pre-packaged meal industries.  Plus, Amazon's purchase of Whole Paycheck  Whole Foods may well be a game changer among large regional and national grocery chains.

Remember Webvan, the fall-on-its-face complete failure in the online grocery order and delivery service?   Well, some grocers and independent shopping and delivery companies are attempting to bring that grocery service back to the masses.  The typical platform for this online order, shopping, and delivery service is either a delivery charge fee  (such as Safeway uses), or a subscription-based fee (such as  Instacart and Amazon's new Amazon Fresh use).

Here Comes Walmart

But now we've got big old Walmart attempting to place catch-up, and in a big way.  Walmart put its own twist on grocery shopping services two years ago, when it started offering online grocery shopping, picked in-store by a Walmart Personal Shopper.  Your groceries are then made available by pickup at the Walmart store, with the groceries delivered to your vehicle which has a reserved pickup parking space.  This service is currently available in about 1,000 of Walmart’s 4,699 United States stores.

But here's where Walmart's twist comes in.  You know the delivery or subscription fees charged by the other companies for shopped and delivered groceries?  Well, not at Walmart.  Walmart charges nothing for the service, although they do require a $30 minimum order.  Granted, there are differences.  Walmart's gig is not a deliver-to-your-home service, rather a deliver-to-your-car-in-the-parking lot service.  Read more about this service in this New York Times article.

Grocery orders ready for pickup at Walmart.
Photo credit:  newyorktimes.com
Just how sustainable is Walmart's new grocery business model?  Not very, in my opinion.  Walmart's shopping and take-to-your-vehicle grocery service requires (1) employees to shop for the customer, (2) employees to deliver the groceries to the car, (3) an online platform for customer shopping, (4) more employees to maintain and update the online shopping site, and (5) dedicated grocery pickup parking spots, and those take away parking from the rest of the in-store shoppers.

And (1), (2), (3), (4) and (5) are, well, not free.  I can't see Walmart permanently bleeding money on this service, nor do I envision either Walmart management or shareholders allowing this to happen forever.  Something's going to eventually give, either via increased prices in Walmart's grocery products to pay for this service, a shopping/take-to-your-vehicle fee, or a subscription-based fee.

And what happens when Walmart eventually charges a fee, or increases grocery prices to cover this grocery-related service?  Will customers ... who were accustomed to free!  free!  free! ...  continue to use the grocery shopping and deliver-to-your-vehicle service when they now have to shell out money to do so, either via a fee or higher prices?

Some customers will fork over the extra dough for the convenience. But if history is any indication of price- and fee-sensitive people, a large percentage of customers will likely say sayonara. Adios. Goodbye.

And when it gets right down to it, how many people truly want someone to grocery shop for them? Don't people generally want to squeeze the toilet paper, choose their own oranges, check store sales, stare at the ice cream selection for just the right flavor, buy a few impulse items, and pick out their own meat and cheese?  I think yes.  And don't forget the in-store ability to read labels before purchase.  And I think we'll continue to have fallout from grocery stores and other companies that place high wagers on the success of questionable grocery shopping and delivery business models.

Mary Rae Fouts

1 comment:

  1. What happens when too many cars come to get groceries and not enough reserved parking spaces?


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