DALLAS — After a successful test of using Uber drivers to make grocery deliveries in a handful of cities, Walmart is intensifying the battle to gain share of online grocery spending by taking its service to 100 metropolitan markets.
The largest U.S. retailer is leveraging its stores to roll out online grocery deliveries from 800 Walmart stores by the end of the year. The expansion will cover 40 percent of U.S. households, said Tom Ward, Walmart vice president of digital operations.
The delivery service has been tested in Dallas-Fort Worth since August, with Walmart employees filling the orders and Uber drivers making the deliveries. The test included six markets — Dallas; Phoenix; Denver; San Jose, Calif.; Tampa, Fla.; and Orlando, Fla.
At the same time, Walmart is expanding its online shopping with a curbside pickup option available at 1,200 stores. It will add the feature to 1,000 more locations by the end of the year, Ward said.
About 90 percent of Americans live within 10 miles of a Walmart, Ward said. As it takes the service to other cities, it may use other crowdsourced delivery methods in addition to Uber.
All will be required to get groceries to a customer in the same time that a shopper would take to drive home, he said.
While it’s still a sliver of the total grocery basket today, Walmart, Amazon and traditional grocers are seeing increased demand for the convenience of online grocery shopping.
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Online grocery shopping is forecast to grow to $100 billion, or $850 per household, by 2022, according to a study by the Food Marketing Institute and Nielsen.
That’s out of the total $700 billion to $800 billion spent annually on food and beverages only, excluding other household products such as cleaning supplies and health and beauty products regularly purchased at the supermarket.
Between Walmart, Amazon, Target, Shipt, Instacart and major supermarket chains including Kroger and Albertsons, by the end of the year most Americans should have at least a couple options for having groceries purchased online delivered to their homes.
So far, Walmart has 18,000 employees shopping for online customers in its stores, Ward said. He wouldn’t share numbers showing how many consumers are using either the curbside or Uber delivery service. But last May, when the curbside service was about 18 months old in Dallas-Fort Worth, Walmart said some north Texas stores were filling 900 orders a week.
The average was about 500 to 600 orders a week from about 50 stores.
Online grocery service fees vary, but what they have in common is that they don’t cover the cost of online grocery shopping. Still retailers have to offer it or be left behind.
Walmart charges $9.95 for all deliveries with a minimum purchase of $30. All prices for online groceries are the same as in the stores, Ward said.
While Amazon may ship more grocery items — when you consider frequent Prime Now deliveries of a couple items needed fast — Bishop said, Walmart probably leads for traditional weekly grocery shopping orders. With delivery being extended to more markets, and with expanding curbside service, Walmart will continue to lead, he said, because of its stronger store presence.
Walmart has more than 5,380 stores and warehouse clubs in the United States. When Amazon purchased Austin-based Whole Foods Market and its 460 stores last summer, traditional grocers accelerated plans to offer more online options for customers.
Dallas-Fort Worth shoppers have seen their grocery options explode the last few months.
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This year alone, Amazon started using Whole Foods Market stores — first in Dallas and Austin — to fill its two-hour Prime Now orders.
Aldi, Albertsons, Tom Thumb, Kroger and Sam’s Club added home deliveries through Instacart, and Target started using Shipt to fill orders from its stores after purchasing the whole company in December.
Dallas is one of Instacart’s markets with the most stores, said Instacart spokeswoman Dacyl Armendariz.
Instacart started serving 30 markets in 2017, and today is in more than 210 markets, she said.
“Our goal is by 2018 to reach 80 percent of U.S. households,” Armendariz said.
“Grocery is one of the last bastions of e-commerce, and it’s here to stay,” Armendariz said. “Our grocery partners need a strategy, and they need more options.”
Instacart has two ways shoppers can use the service. A subscription much like Amazon Prime that comes with unlimited free shipping is $149 a year or $14.99 a month.
The other option requires no membership, but there’s a $35 minimum order and a $5.99 fee.
Both options have a 10 percent additional charge, which Amendariz said is there, “to help operate and provide the best customer service,” but the shopper can waive it online. Also, prices may not be the same as in stores, but that message is prominently displayed when the customer selects a store.
Tips are encouraged for good service, she said.
“People will pay for convenience and you can shop stores you know and trust in your market.” The Instacart employees get to keep 100 percent of any tip.