• Market Crumbs

Grocery Delivery Wars Heating Up As Walmart Goes For Amazon's Jugular

Walmart is continuing to remind everyone that as the world's largest retailer, it isn't going to just sit back and let Amazon take its cake.

It announced that it will expand its "Delivery Unlimited" grocery delivery service nationwide. The service, which they've already been testing, will be available at 1,400 stores this fall, reaching 50% of the U.S. population.

In an effort to compete with Amazon's AmazonFresh delivery service and delivery from its subsidiary Whole Foods Market, Walmart is undercutting them on price. Both offerings from Amazon require a $119 per year Prime subscription, with AmazonFresh costing an additional $14.99 per month on top of the membership. Walmart's Delivery Unlimited will offer free unlimited delivery for only $98 per year.

After years of struggling to keep pace, Walmart isn't being shy about competing with Amazon. In fact, the head of their e-commerce division sold Diapers.com to Amazon, then started Jet, which he sold to Walmart. He's moving Walmart away from the prior strategy of acquiring a bunch of companies towards creating brands in-house, such as Allswell, a mattress company to compete in the crowded mattress market.

They expect to have free next-day delivery to 75% of the U.S. population later this year, matching Amazon's next-day delivery for Prime members. These initiatives are coming at a cost, though. Online sales are expected to increase by 35% this year with losses for the division estimated to grow to $1.7 billion from $1.4 billion last year.

With both sides having deep pockets and willing to post losses to gain market share, it will be interesting to watch this continue to play out. Like the wars in the TV streaming space, it may even continue to lead to lower prices for consumers.

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