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OM in the News: Walmart Matches Amazon With One-Day Shipping

May 27, 2019

“Walmart wants to one-up Amazon in the fight for online shoppers”, writes Material Handling & Logistics (May 15, 2019). The world’s largest retailer is rolling out a next-day delivery service to counter Amazon’s recent move to speed shipment times for top customers to just 1 day from 2. Walmart customers in Phoenix and Las Vegas who buy at least $35 worth of goods now get free 1-day shipping. The offer will be applied to 220,000 items and will reach 3/4 of the U.S. by the end of 2019.

Unlike Amazon, which will spend $800 million this quarter to reduce delivery times, Walmart said its shift will actually cost the company less since the items will typically come in just one box from a single warehouse that’s closest to the customer. Keeping a tight lid on expenses is paramount for Walmart, whose domestic e-commerce business isn’t profitable. Walmart has plowed billions into e-commerce to carve out a piece of the market where Amazon rakes in almost 50 cents of every dollar spent online.

The next-day shipping applies to a broad range of merchandise — up to twice the number of items found in a typical Walmart supercenter — and include paper towels, dog food and diapers. Unlike Amazon’s 1-day delivery, which is available for its Prime customers who pay an annual fee of $119, Walmart’s service will be available without a fee.

Walmart will rely on its existing network of national and regional transportation companies to handle deliveries. For the past year, Amazon has offered to help entrepreneurs fund startup delivery businesses to expand its own logistics capacity. Walmart, meanwhile, has experimented with having its staffers make deliveries on their way home from their shifts.

Classroom discussion questions:

  1. What are Walmart’s strengths and weaknesses in this battle?
  2. How do the strategies of the two giants differ?
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