Ding Dong! Walmart to Test Home Delivery
An anonymous source apparently told Bloomberg News that Walmart is thinking of testing home delivery in the San Jose, Calif. area with the code name "Project Titan." Often, where there's smoke there's fire, and this is no exception. Especially since there's a project name and very specific location being mentioned. But Walmart has made no secret of its interest in home delivery and has said as much.During a presentation last October, CEO and President of Wal-Mart International Doug McMillon outlined the various ways in which that division can grown. Subsequent presenters discussed learning gleaned from Wal-Mart stores outside the U.S. and one of those was home delivery, including basic necessities such as groceries.
Home delivery, especially of grocery items, is tricky to pull off. Peapod.com began in 1989, and after 12 years it serves just 22 markets. It's taken this long for the service to reach Manhattan, expanding there in March. New York is one of those markets where home delivery is particularly useful and in demand: Most everything can be delivered nearly any time of day or night.
Other chains have toyed with the concept. Amazon.com has Amazon Fresh, but only in Seattle; Safeway delivers online orders within the hour to several communities in Northern Calif., Seattle, Phoenix, Ariz., Maryland, Philadelphia and Washington D.C.; and Sears Holdings is testing the concept at Sears and Kmart stores in Chicago.
Given Wal-Mart's efficient distribution system and technological infrastructure, it makes sense for the chain to give it a try, its ASDA division successfully delivers groceries in the United Kingdom. But home delivery is typically a premium service, with higher product prices and delivery fees. Is this the Wal-Mart customer, or can Wal-Mart change this business model as well?
Time will tell, but the chain is looking for growth in the U.S. by aggressively rolling out smaller stores and new formats, entering urban markets for the first time and launching in-store pickup for online orders. Getting groceries quickly and cheaply can be added to that list.