Is Wal-Mart's same-day delivery threat to Amazon?
The country's largest brick-and-mortar retailer is trying to beat the e-tail giant at its own game.
This week, Wal-Mart (WMT) rolled out Wal-Mart To Go, a same-day delivery service for online orders that will be offered throughout the holiday season. The service, which will tack on $10 per order regardless of size, is already available in Philadelphia and northern Virginia, and will soon spread to Minneapolis, San Jose, and San Francisco.
Capitalizing on customers' increased preference for ordering merchandise online, the move is meant to send shivers down the spine of Amazon (AMZ), which has been almost frighteningly successful in pushing traditional brick-and-mortar retailers toward the brink of failure.
Amazon's own same-day delivery service, introduced in 2009, currently operates in 10 U.S. markets.
So should Amazon be worried?
Wal-Mart has one significant advantage: Its program "highlights the key advantage enjoyed by the world's biggest retailer in the race to get customers what they want, when they want it: Location, location, location," says Marcus Wholsen at Wired. Instead of relying on a handful of distribution centers, as Amazon does, Wal-Mart has nearly 4,000 stores across the country that can deliver goods. "Proximity of goods to customers is essential to shortening delivery waits," says Wholsen. "Turns out one of the most promising ways to succeed at e-commerce might be to have a real store after all."
And this could change the way people shop at Wal-Mart: Amazon should definitely be concerned if Wal-Mart becomes synonymous with same-day delivery. "The first retailer to master same-day delivery on a wide scale could attract customers who have avoided online purchases because they wanted items immediately," says Stephanie Clifford at The New York Times, "and encourage current shoppers to add products that they usually buy from supermarkets or drugstores, including celery and toothpaste."
But Amazon still has a leaner operation: Analysts are still skeptical that Wal-Mart can pull it off. "Shipping from stores, rather than warehouses as Amazon does, is expensive," says Shelly Banjo at The Wall Street Journal. Analysts say it could be four times more expensive for a retailer to locate and ship merchandise, compared to a distribution center with a streamlined, automated process.
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