Walmart's plan to conquer New York City is becoming more clear (WMT)
Jet.com, an e-commerce subsidiary of Walmart, announced on Tuesday that it is building a fulfillment center in the Bronx this fall.
It will work with Parcel, a last-mile delivery service that Walmart purchased in 2017, to provide same- and next-day delivery of fresh grocery items and other goods.
Walmart is linking its acquired startups together as the retail giant's plans to finally invade New York City are becoming more clear.
With not a single Walmart store within city limits, the United States' largest retailer hasn't been much of a player in the country's largest city.
But that could change very soon as Walmart leverages its Jet.com e-commerce brand — headquartered across the Hudson River in Hoboken, New Jersey — to take over the Big Apple.
Walmart is now building a fulfillment facility for Jet in the Bronx. Opening this fall, the facility will be designed to deliver fresh grocery items, consumable goods like toothpaste and paper towels, and some other merchandise to New York City addresses, either the same day as ordering or the next. The plan is for the warehouse to stock only items sold on Jet.
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Walmart purchased Jet for $3.3 billion in 2016, turning its focus to the millennial urban consumer who hasn't historically been reachable by Walmart.
Jet will use another Walmart subsidiary, Parcel, to deliver goods from the new warehouse. Parcel is a last-mile delivery service that Walmart purchased in 2017 for an undisclosed amount.
The acquisition of Parcel signaled a desire to boost the retailer's same-day delivery ability so that Walmart could better compete with other same-day delivery services, like Amazon's Prime Now. Parcel also has New York-centric consumer data that Walmart can make use of, including a database with information on the buildings the company has delivered to, according to Recode.
The so-called "last-mile problem" — figuring out how to deliver to customers who have neither front porches nor doormen — is one of the biggest problems that online retailers face in getting items into customers' hands, especially in a big city like New York. Parcel's delivery vans have the words "No doorman? No problem" emblazoned on the side in big letters.
In 2017, Jet also announced a partnership with Latch, another New York-based startup that offers keyless entry for delivery personnel to leave packages inside apartment buildings without doormen.
Walmart is investing in online shopping to break into New York
In a post on Walmart's press blog in 2017, Nate Faust, a senior vice president at Walmart, called New York the "top market" for both Jet.com and Walmart.com. New York real estate is expensive, and much of the city does not regularly interact with the Walmart brand, making the e-commerce route a more viable option.
At the same time, same-day delivery is increasingly seen as the next iteration of e-commerce, in the same way that two-day shipping has become the standard. Amazon has also been investing in same-day delivery with its Prime Now service.
More possible evidence that Walmart is taking New York online shopping seriously: the company' e-commerce CEO and founder of Jet, Marc Lore recently purchased a large penthouse in Manhattan, according to the Wall Street Journal.
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