Walmart takes aim at Amazon with foray into delivery business

Walmart is launching a new delivery service for other businesses as e-commerce continues to boom amid the pandemic and online behemoth Amazon threatens to overtake the brick-and-mortar retailer as the largest in America.

Dubbed GoLocal, the new service “empowers businesses to grow using Walmart’s delivery capabilities and nationwide coverage at competitive pricing,” the company said in a press release on Aug. 24.

“Be it delivering goods from a local bakery to auto supplies from a national retailer, we’ve designed Walmart GoLocal to be customizable for merchants of all sizes and categories so they can focus on doing what they do best, leaving delivery speed and efficiency to us,” Tom Ward, Walmart’s senior vice president, was quoted as saying in the release.

The move marks the latest chapter in the fight between Walmart and Amazon, which has also developed its own sprawling delivery network in recent years, for dominance in the retail space. Multiple Wall Street firms have predicted in recent months that Amazon will soon or already has usurped Walmart as the biggest retailer in the world outside China, where Alibaba reigns as king.

“I think this announcement is a very wise move on the part of Walmart,” said Arthur Dong, a business professor at Georgetown University who focuses on strategy. “They’ve been watching very carefully Amazon's growth, and they also have noticed that two-thirds or more of Amazon’s sales are third-party sales.” In other words, Dong said, Amazon profits by charging independent retailers a fee to sell and ship their products.

“Walmart is doing the same thing,” Dong said. “I think Walmart is actually sending a very serious signal that they intend to not only do formal brick-and-mortar retailing but also to really elevate, in a sense, their strategy with regard to their online initiatives.”

Walmart says GoLocal will rely on its current delivery network, including Spark, its Uber-like digital platform for drivers who want to make money delivering packages. GoLocal will also make use of “other delivery modes as they scale including electric vans, autonomous vehicles, drones,” and more, Walmart spokeswoman Camille Dunn said in an email to the Washington Examiner.

The new delivery service is “an important part of the company’s overall strategy,” Walmart said in the release, and it is the latest in a series of moves to find new ways of bringing in revenue as competition with its online rival heats up. In July, Walmart announced that it would start making some of its digital services available to other businesses.

Walmart’s foray into commercialized delivery services is also representative of retailers’ growing investment in logistics as online customers expect speedier shipping and of the increased competition in an industry once dominated by more traditional parcel carriers such as FedEx and UPS. Amazon delivers more than half of its own packages now, and in 2018, Home Depot started investing more than a billion dollars to beef up its supply chain, offering new express delivery by partnering with gig economy delivery ventures. Meanwhile, Target now owns Shipt, another same-day delivery service.

Walmart has been growing its delivery capabilities recently, too. “In just three years, Walmart launched and scaled delivery and Express delivery for its customers on 160,000+ items from more than 3,000 stores, reaching nearly 70% of the U.S. population,” the company said in its release.

Dong said companies such as Walmart and Amazon are better viewed “less as retailers and more as distribution entities.” But though both can save money by delivering products on their own for now, those cost savings could vanish due to the current labor shortage and future unionization efforts, both of which could force the companies to offer more competitive wages and benefits.

“UPS and FedEx are just sitting back and saying, ‘You think this is going to be so easy. It’s not going to be that easy once you confront the kind of costs that we are facing, which is the Teamster unions and all the benefits that go along with it,'” Dong said.

Walmart’s advantage is that it already has “a very well-built infrastructure” that includes stores and distribution centers, Dong said, as well as a massive number of existing employees, who have been encouraged to sign up to deliver with the Spark platform, an appealing opportunity for those employees who make the least.

As the Arkansas-based retail giant tries to keep pace with Amazon, it could also face some of the same public criticism the online mammoth has received for its treatment of employees. Amazon quickly built a vast delivery empire to guarantee short shipping times to a growing number of customers across the world, a number that the pandemic only helped increase as more people sought to buy daily necessities from home. But the online retailer has faced blowback for reportedly prioritizing speed over public and driver safety.

Though Walmart’s been no stranger to scrutiny over its treatment and compensation of workers in the past, it’s now betting on its experience and reputation to distinguish itself from competitors such as Amazon. “We’re not the new kid, & that’s a good thing,” the company notes on the GoLocal website.

“Our decades-old, best-in-class transportation programs have always prioritized driver safety,” said Dunn, the company spokeswoman. “As we expand into new delivery channels, we’ll continue to maintain a thoughtful approach that emphasizes the driver experience. We consistently maintain high driver satisfaction scores, continuously gather feedback from drivers, and are always looking at industry best-practices and gathering key learnings to enhance both the driver and customer experience.”

In any case, GoLocal already has deals with merchants, but Walmart isn’t saying how many or who they are. “We are not disclosing current clients at this time but will have more to share soon,” Dunn said.

Emma Loop is a Washington, D.C.-based freelance reporter. She has written for multiple publications including The News Station, Buzzfeed, and Foreign Policy.

Washington Examiner Videos

Tags: Business, Amazon, Walmart, Retail, Commerce, Technology, Shopping, Consumers, Supply chain

Original Author: Emma Loop

Original Location: Walmart takes aim at Amazon with foray into delivery business