Walmart Canada WMT-N is dipping a toe into the growing competition for rapid-delivery grocery customers, testing out a 30-minute service in the Greater Toronto Area starting on Thursday.
The company is announcing the launch of Walmart Now in partnership with third-party delivery company Instacart, which will fill orders in as little as half an hour from 10 Walmart stores in the city. If successful, the service could expand to more markets in Canada. The news was released just a day after Loblaw Companies Ltd. announced its own quick-delivery initiative, which will launch in August in a partnership with San Francisco-based DoorDash Inc.
The announcements from two of Canada’s largest grocers highlight the intensifying battle to keep up with customers’ changing buying habits. While rapid delivery is a relatively nascent market in Canada, in other countries such services have been growing: Startups such as as Gorillas, Gopuff and Getir advertise delivery options in as little as 10 to 15 minutes. Those brands have yet to launch in Canada, but smaller companies here have been working to build customer loyalty. Last week, grocery e-commerce company Inabuggy Inc. struck a deal to buy Ninja Delivery, which offered to ferry orders to customers’ doors on e-bikes in just 10 minutes.
“It’s obviously a competitive landscape in the different markets, and I’m sure it will be a competitive landscape in Canada as well,” Saeed Anslow, vice-president of omnichannel and online grocery at Walmart Canada, said in an interview. “It will be interesting to see how it evolves as other players come into the market.”
Convenience comes with a cost: While the service is launching with a relatively low $2.99 delivery fee (or free for members of the Instacart+ subscription,) products will be listed at a slightly higher price in some cases than standard store prices, Mr. Anslow said. Orders also come with a 15-per-cent service fee, or 5 per cent for Instacart+ members.
Walmart will be watching how customers respond to the offer as retailers across the industry report that many shoppers are shifting their buying habits to counter the effects of inflation.
“We know for some customers, they value time and convenience,” Mr. Anslow said. “We do think there is a market for this convenience proposition, and for fast deliveries.”
Walmart already works with third-party delivery partners including Instacart, DoorDash and Uber Eats to augment its own fleet of delivery vehicles, for options including same-day and next-day delivery. The Walmart Now pilot program will be exclusively with Instacart. To make the 30-minute timeline work, the company is offering a narrower selection of items – roughly 4,000 products compared with roughly 65,000 that are available with other store pickup and delivery options – and will have a dedicated Walmart Now picker to fill orders at each of the 10 stores.
The company looked at two-hour delivery purchases to help determine the items most likely to be popular with Walmart Now customers. The pilot stores have a delivery reach to roughly 40 per cent of the Greater Toronto Area, Mr. Anslow said.
Walmart has also been investing in renovations to existing stores to carve out more space for e-commerce fulfillment. For example, in a store in Toronto’s east end, the company recently repurposed space for dedicated online order packing; products stored in bins move on conveyer belts to speed up the process. Two years ago, Walmart also set aside 10,000 square feet of space in a store in Vaughan, Ont., dedicated to online orders. The changes are part of a five-year, $3.5-billion investment Walmart Canada announced in 2020 to bring digital tools into its stores as well as to improve its e-commerce capabilities. The company has more than 400 stores in Canada.
“Just a couple of years ago, our best proposition was next-day delivery,” Mr. Anslow said. “We’ve made huge investments in e-commerce. ... We want to leverage our stores as a competitive advantage.”
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