Walmart, Target Step Up Delivery Tactics

In the ongoing scramble for America’s fast-growing love of virtual shopping, both Target and Walmart are experimenting with some new moves.

Walmart, which is already offering a number of pick-up options for grocery, shook up its playbook with the purchase of Parcel, a tech-based delivery company based in Brooklyn. Besides delivery in the New York City area, it also offers such services as scheduled evening deliveries and custom text notifications.

The Bentonville, Ark.-based retailer says the acquisition is just one more way the retailer is trying to solve the puzzle of “the last mile,” getting items bought online into the hands of shoppers. “Parcel is a proven leader in e-commerce package delivery, including fresh, frozen and perishable food,” says Nate Faust, senior vice president, Walmart U.S. eCommerce Supply Chain, in a blog post.

He says buying Parcel adds capabilities to ongoing tests its Jet site has been running. “We can build upon that and plan to leverage Parcel for last-mile delivery to customers in New York City — including same-day delivery — for both general merchandise as well as fresh and frozen groceries from Walmart and Jet.”

Walmart is already offering curbside pickup for groceries, refrigerated pickup lockers, home deliveries made by its associates, and even in-building and in-refrigerator deliveries. (Consumers program their home locks with a one-time code.) 

Target is also feeling its way, announcing Drive Up, a test in stores in the Minneapolis/St. Paul area that lets shoppers order via an app, then hit on “I’m on My Way” button once they’re en route. They then park in designated spaces, and a Target employee brings the order out to them. For now, the program only includes non-perishable grocery items.

The rush to find more effective ways to get online orders into customers hands has been intensifying, with everyone from Amazon to regional grocers sharpening their omnichannel offerings as consumers grow hungrier for online grocery options. 

While online grocery sales still only account for 3.4% of total supermarket sales, reports the latest measurement from Brick Meets Click, a retail consultancy based in Barrington, Ill., that percentage jumps to 5.2% for retailers who have had such offerings for four years or more. And it’s growing fast, with same-store sales for online ordering up 26%, year over year.

“The good news is that supermarket ecommerce growth was happening even before Amazon announced the purchase of Whole Foods,” says David Bishop, partner at Brick Meets Click, in the report. “And the rapid deployment of a number of different Walmart initiatives reveals that the company considers online grocery an important gateway to their ecommerce growth.”

It says 24% of all shoppers bought groceries online in the last 30 days, up from 22% two years ago. Online transactions per store have climbed nearly 20% from last year, while total online sales are growing 25%. 

The average order is now $148, up some 5%, which it says indicates increased confidence, with 85% including some produce and 66% containing some meat or deli item. (Initially, shoppers had been leery of buying fresh foods, worried about both quality and spoilage.)