Tag: grocery

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Pandemic helped drive Walmart e-commerce sales up 97% in second quarter

Walmart’s investments in e-commerce, including online grocery delivery and pickup, are continuing to pay off for the retailer. In the company’s Q2 earnings, released this morning, Walmart reported its U.S. e-commerce sales were up 97% — an increase attributed to more customers shopping online during the pandemic, stocking up on household supplies, and shopping for grocery items online.

Today, Walmart offers grocery pickup at 3,450 locations and same-day delivery at 2,730 stores. Since February, it has expanded time slots by 30% to help meet consumer demand.

Overall, the company also benefited in the quarter from the impact of U.S. consumers’ government stimulus checks. As those stimulus funds ran out, sales began to normalize. But Walmart’s July comparable sales still grew by more than 4%, the company noted.

Walmart’s online marketplace also got a boost from the larger e-commerce bump, with sales up by a triple-digit percentage.

In addition, Walmart’s U.S. same-store sales were up 9.3% in the retailer’s fiscal second quarter, led by strength in general merchandise and food. Walmart President and CEO, Doug McMillon, also noted the retailer saw strong sales in categories like TVs, computing devices, and connected home — sales that also have ties to the pandemic which is forcing people to spend more time at home. He also said some consumers continued to stockpile items in coronavirus hotspots, like cleaning supplies, which were still often out-of-stock. Both cleaning supplies and paper goods (e.g., TP and paper towels) led Walmart’s consumable sales in the quarter.

The overall rise in grocery orders, meanwhile, can be partially attributed to the pandemic’s impacts and not just the ease of shopping for grocery items online. As more people have been cooking meals at home instead of dining out at restaurants, their grocery orders have also increased. Walmart said both grocery pickup and delivery saw “all-time high sales volumes” in the quarter.

The pandemic has been changing how consumers shop, too, the company pointed out. Instead of regular trips to the store, consumers now shop less frequently but buy more during each trip. Combined with the shift to e-commerce, that led to a 27% increase in comparable average ticket sizes in the quarter, while comparable transactions dropped 14%.

On the earnings call, McMillon briefly confirmed Walmart’s plans to introduce a membership service, as had been previously reported. The company is said to be working on its own alternative to Amazon Prime, dubbed Walmart+. But the launch has been repeatedly delayed, Vox recently reported. According to the CEO, Walmart has been testing the delivery component to the membership service since last year with its “Delivery Unlimited” program, which McMillon referred to as “a great base of an offer” for a broader membership program.

Today, Delivery Unlimited subscribers pay either $12.95 per month or $98 per year to order groceries online from Walmart.com without a per-order fee. Walmart+, however, will reportedly include other perks, like gas discounts and special product deals. McMillon didn’t speak to the specifics of its service, saying instead that Walmart will have more to offer when it’s ready to talk about it.

Overall, Walmart beat on earnings in the quarter, with revenue of $137.74 billion, topping estimates of $135.48 billion. Earnings per share came in at $1.56 adjusted, versus the expected $1.25. Net income also rose year-over-year to $6.48 billion, or $2.27 per share, up from $3.61 billion, or $1.26.

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Walmart is piloting a pricier 2-hour ‘Express’ grocery delivery service

Record usage of grocery delivery services amid the COVID-19 pandemic has led to delayed orders, fewer open delivery windows and, on occasion, an inability to even book a delivery time slot. Walmart now hopes to capitalize on the increased demand for speedier delivery with the introduction of a new service that allows consumers to pay to get to the front of the line. The retailer confirmed today it’s launching a new Walmart Grocery service called “Express,” which promises orders in two hours or less for an upcharge of $10 on top of the usual delivery fee.

The service has been in pilot testing across 100 Walmart stores in the U.S. since mid-April. Walmart says it plans to expand the service to nearly 1,000 stores in early May and it will be offered in a total of nearly 2,000 stores in the weeks after.

Some Walmart customers may have recently received a push notification alerting them to the launch.

To use Express delivery, you first fill your online Walmart Grocery cart with the $30 minimum required for delivery orders or more. The Express service offers more than 160,000 items from across Walmart’s grocery, consumables and general merchandise categories. At checkout, you’ll see an option beneath the calendar where you pick a delivery date to select the Express service. In many cases, there may not be other standard delivery time slots available for the current day or even several days out, which makes the Express service even more appealing to shoppers who need their orders sooner.

Though Walmart is officially promoting Express as a “two-hour” delivery service, in the weeks it’s been piloting the program Walmart has been able to deliver these orders within 56 minutes, on average.

“In our tests, we were shown an Express fee of $18.90 to receive a delivery in 55 mins or less,” the app informed us today, April 30. There were no other fees. Without choosing the Express option, the next available time slot was not until next week, on Monday, May 4.

A price of $18.90 is close to — but is not exactly — a $10 increase over Walmart’s typical delivery fees of $7.95 or $9.95, depending on time of day. But we understand the plan is to make Express a flat $10 upcharge moving forward. (Walmart hadn’t been planning to officially announce the launch until next week, so pricing is being updated.)

Like Walmart’s other grocery deliveries, Express deliveries are handled by Walmart’s external network of delivery partners, which vary by market. The retailer won’t comment on if those additional fees are split with their partners, or how, if so.

There could be backlash against a system like this, given how it favors a wealthier customer at a time when food and other critical supplies have run short. During the pandemic, store shelves have often been bare as consumers hoarded things like toilet paper, hand sanitizer and Lysol cleaners. Now, consumers are being warned that meat shortages are expected soon.

In addition, the pandemic has already exposed the income divide between those who can afford to shop online and low-income customers, who can only use their SNAP benefits (food stamps) in physical stores — except in a handful of states where a USDA pilot has been running. And now those with the means will be able to gain another advantage: paying to get to the limited supplies first.

Walmart says it’s doing things to mitigate these types of concerns, however.

For items where the inventory is so limited it can’t guarantee delivery, it’s removing their availability from the online grocery service. Plus, the retailer says it’s not pushing back standard delivery orders to accommodate the high-paying Express customers. Instead, the Express service is being made available on top of Walmart’s existing grocery pickup and delivery capacity.

The Express service wasn’t dreamed up because of the pandemic, Walmart says, but it did play a role in terms of the timing of the launch.

“The demand that we’ve seen during the coronavirus pandemic is making us push forward and expedite the development of some services that we may have been thinking about,” a Walmart spokesperson explained. “But demand has pushed us to innovate more quickly,” they added.

Walmart is not alone in experiencing a crush of online grocery orders due to the COVID-19 pandemic.

The company and others have seen a record number of downloads for their grocery apps in recent weeks. In fact, demand for online grocery as well as other e-commerce orders has been so great that Walmart hired 150,000 new workers out of a pool of over a million applicants a full six weeks ahead of schedule, and is now hiring 50,000 more.

Meanwhile, Walmart’s online grocery rivals — Shipt, Instacart and Amazon — have also been hiring hundreds of thousands of new shoppers between them. Amazon had to implement a waitlist system for new Amazon Fresh and Whole Foods Market pickup and delivery customers due to the rise in online grocery shopping. And Instacart made several adjustments to its app to help better prioritize orders and open up more delivery windows.

In Walmart’s case, its ability to launch Express isn’t solely due to its new hires, we’re told.

The company already employs a workforce of 74,000 “personal shoppers” who dedicate themselves to pulling for online grocery orders. Walmart says Express is powered by these personal shoppers, only some of whom may be the newly hired store associates.

“We have an opportunity to serve our customers no matter what life calls for,” said Tom Ward, Walmart senior vice president, Customer Product. “Whether it be a last-minute ingredient, medicine when a fever hits or the item you didn’t know you needed when checking off your chore list, time matters. Express is a solve for that,” he said.

Updated 4/30/20, 6:35 PM ET with additional expansion details and exec quote. 

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Amazon opens its first cashierless grocery store

Today Amazon is opening its first grocery store to pilot the use of the retailer’s cashierless “Just Walk Out” technology that has previously powered 25 Amazon Go convenience stores in a handful of major U.S. metros. Based in Amazon’s hometown of Seattle, the new Amazon Go Grocery store allows customers to shop for everyday grocery items like fresh produce, meat, seafood, bakery items, household essentials, dairy, easy-to-make dinner options, beer, wine and spirits, and more.

The store is 7,700 square feet in the front of the house and 10,400 square feet overall, making it the largest use of Amazon’s Just Walk Out technology to date.

As with Amazon Go convenience stores, shoppers first use the Amazon Go app to scan in as they enter the store, then shop as usual. Cameras and sensors track the items removed from the shelves which are then added to the shopper’s virtual cart. When the customer exits the store, their cart is checked out automatically using their payment card on file.

The end result is a grocery store with no lines or waiting. Meanwhile, store staff are freed up to take care of other aspects of the business like restocking shelves and customer service.

This model has been working for Amazon’s convenience stores where customers come in to grab items quickly. But grocery shopping presents a new challenge for Amazon’s cashierless technology. Grocery shoppers tend to examine items more closely — often picking up fresh produce, giving it a squeeze, then putting it back. They may push the produce around on the shelf to find one they like. Or they comparison shop, by picking up two products to compare labels, then put one in the cart and another back on the shelf — sometimes in an incorrect spot. They even discard items on different isles instead of walking back to return it to the proper area when they change their minds.

In traditional grocery stores, this wouldn’t be an issue — if another shopper later grabbed the misplaced item, it could still be rung up properly. Amazon’s technology may struggle to determine what that item was, however.

The Seattle store is located at AVA Capital Hill (610 E. Pike Street). Its hours of operation are 7 AM – 11 PM Sunday through Thursday, and 7 AM – midnight on Friday, Saturday and Sunday.

In addition to the typical grocery items, the store promises to offer a mix of organic brands and special finds. Local vendors in the debut assortment include La Parisienne, Donut Factory, Tony’s Coffee, Seattle Bagel Bakery, Lopez Island Creamery, Ellenos Yogurt, Uli’s Famous Sausage, Beecher’s, Eat Local, Sri Bella, Carso’s Pasta Company, and Theo’s Chocolate.

Reports that Amazon was looking to launch its own grocery store business, separate from Whole Foods, began to circulate last year. But it was unconfirmed at the time whether or not Amazon’s grocery plans included the use of its cashierless, A.I.-driven technology, or if the new stores would be more conventional grocery stores designed also to serve as hubs for Amazon’s grocery-delivery business.

It seems Amazon is interested in testing out how well its cashierless technology can scale, but it’s not yet clear how many cashierless stores it wants to open in the months and years ahead.

Source: TechCrunch