US retail giant Walmart is offering free next-day delivery in Phoenix and Las Vegas and plans to expand the offer to Southern California in the coming days, according to the head of its U.S. ecommerce service, Marc Lore.
The service will be rolled out gradually, with a plan to reach approximately 75% of the U.S. population this year, which includes 40 of the top 50 U.S. metro areas, Lore said in comments reported by Reuters.
The move by Walmart comes just weeks after Amazon announced similar plans. It said it wants to deliver packages to members of its loyalty club Prime in just one day and expects to spend US $800 million toward the shipping goal in the second quarter alone.
Walmart is the largest company in the United States by employee count (2.3-million), while Amazon is the largest Internet company by revenue in the world and the second largest employer in the United States.
In 2015, it surpassed Walmart as the most valuable retailer in the United States by market capitalisation and since then both companies have been engaged in a last mile logistics war as they compete in everything from online order delivery to seizing a bigger share of the online grocery market.
Walmart’s offer applies to fewer products (220,000 items), which are the most frequently purchased, ranging from laundry detergent to toys and electronics. The orders also have to be worth at least US $35 to qualify.
“We have been working on this since I have gotten here...we have been building out the infrastructure for the last few years to support this,” said Lore, who joined the retailer in 2016 when it acquired his company, Jet.com.
The vast majority of the order volume for such a service comes from the “first couple of hundred thousand” products, he said.
The move will cost Walmart less as orders will be delivered from warehouses closer to the customer and arrive in a single box instead of multiple packages, Lore said.
“It is counter-intuitive... but the way we have structured our network, we will see improved profitability as a result of lower shipping cost,” he said.
Walmart sends out boxes from multiple warehouses around the country under its two-day shipping program, but with one-day shipping, it is stocking inventory in the closest single warehouse to the shopper, Lore said.