Is Walmart's Grocery Delivery Service a Bad Idea?

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Is Walmart's Grocery Delivery Service a Bad Idea?Like any number of retailers before it, Walmart (WMT) has decided to experiment with the home delivery of groceries. The "Walmart To Go" service, which is being tested in San Jose, Calif., offers "special offers" and "great savings," a pitch that sounds a great deal like Walmart's major message of "Everyday Low Prices" The products offered through the new website are similar to those available from other Internet-based home-delivery services like Fresh Direct.

Walmart obviously will roll out the service across the country if it does well financially in San Jose. The benefits of the program are clear. People who don't use Walmart for grocery shopping already, or who use it infrequently, may turn to the big box retailer more often, which would increase the chain's grocery revenue. The question is whether a delivery service will hurt other sales categories for the world's largest retailer.

One of Walmart's strongest attractions for consumers is its broad array of services. A customer who goes into the store for food may also decide to buy a pair of shoes or use its pharmacy. The option of ordering groceries online will almost certainly reduce the number of in-person visits to Walmart stores, which in turn will eliminate some of the casual purchases these people would have made.

Walmart may pick up a new category of customers with home-delivered groceries. But it risks losing one of its best ways of luring people into its stores to buy things other than groceries.

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