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Walmart Partners With Instacart for Same-Day Grocery Delivery
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Walmart made a major announcement last week in another bid to compete against Amazon — this time for same-day grocery delivery.
The retail giant revealed that it is partnering with Instacart, the fast-growing, third-party grocery delivery service. The new partnership provides Walmart customers in four pilot markets — Los Angeles, San Francisco, San Diego, and Tulsa, Olka. — access to Walmart’s grocery delivery services when ordering via Instacart.
In addition to food items, customers will be able to select alcohol, pantry staples, home decor, personal electronics, and more for same-day delivery, as fast as one-hour.
Instacart currently works with other leading grocery chains such as Albertsons, Aldi, Costco, Harris Teeter, Kroger, Safeway, Shaw’s, Super Fresh, Target, and Wegmans, and pharmacies like CVS. Instacart also has an existing partnership with Sam’s Club, owned by Walmart, which will also remain in place.
This partnership comes at a pivotal time. Grocery and Gourmet sales across e-marketplaces rose 65% in July compared to pre-Covid, according to Feedvisor data. Many consumers are opting to get their groceries delivered during the pandemic rather than waiting in long lines and facing the potential health risks associated with shopping at brick-and-mortar stores.
Currently, 10% of U.S. consumers regularly do their grocery shopping online, and 50% of U.S. grocery shoppers purchase at least some of their groceries online. Even when the pandemic passes, it is assumed that online grocer services will continue to hold firm. Digital grocery sales are expected to reach $59.5 billion in sales by 2023.
Amazon vs. Walmart: Online Grocery
The Walmart and Instacart partnership is poised to rival Amazon, which offers grocery delivery via Amazon Fresh and Amazon Prime Now, from its own warehouses and from Whole Foods Market stores.
Since Amazon purchased Whole Foods in 2017 for $13.7 billion, it has been offering its customers online grocery shopping with fast delivery benefits, allowing it to compete against the brick-and-mortar grocers.
Walmart, the current brick-and-mortar leader, is taking the reverse stance. By aligning itself with Instacart, Walmart can enhance its online ordering and delivery offerings to compete in the digital grocery space during a time in which rapid delivery and essential product availability is critical to consumers.
According to a survey conducted by CPG analytics firm TABS Analytics and Caravan Engine, 36% of U.S. internet users said they bought groceries online from Amazon in 2019 compared with 29% who said they shopped at Walmart.
Amazon had recently acknowledged competition stemming from Instacart, even before the delivery service linked up with Walmart. In July, Jeff Bezos said, “We also face new competition from the likes of Shopify and Instacart — companies that enable traditionally physical stores to put up a full online store almost instantaneously and to deliver products directly to customers in new and innovative ways — and a growing list of omnichannel business models.”
Fast, same-day deliveries are essential for any grocer competing in the digital space. By partnering with Instacart to meet this growing need, this is a step in the right direction for Walmart, and helps to strengthen its competitive stance against Amazon.