April 17, 2024

Wal-Mart Tests Service for Buying Food Online

The company has been expanding its online options, including a nationwide rollout of a service that lets customers order merchandise (not food) online and pick it up in the store the same day. While that program is aimed at getting shoppers into stores more frequently, this one creates a more convenient way to buy from Wal-Mart.

Wal-Mart declined to make executives available for interviews about the grocery test, which started Saturday. In early March, asked about the possibility of an online grocery ordering service, Steve Nave, senior vice president and general manager of Walmart.com, would not discuss specifics.

“One of the great things about Wal-Mart is we’ll put something out there, test and learn from it,” he said. “I would say nothing is off limits.”

Other grocers, including Safeway and Peapod, which is affiliated with Giant Food, offer a similar service. Choose grocery items via a Web site, select a delivery time and the groceries are dropped off at your house. Fresh Direct and AmazonFresh, neither of which are run by brick-and-mortar grocers, also offer a grocery delivery service.

But some grocers have said it is not a good use of resources. Supervalu, for instance, ceased offering online grocery delivery in 2009, saying most of its customers would prefer to get groceries in a store. And one of the more notorious dot-com busts was Webvan, a grocery delivery service that went bankrupt in 2001.

Delivery charges for Wal-Mart to Go start at $5.

For the test, Wal-Mart is shipping groceries from a San Jose store, packing them in tote bags and delivering them in temperature-controlled trucks that the company owns. Deliveries can be scheduled for the next day.

Currently, the groceries available lean toward prepackaged goods. Customers cannot order beef to specifications, for instance — they must buy precut meat in a range of packages. And in the produce category, while fresh mangoes and bananas are available, oranges and lemons come in bags of several pounds rather than individually.

Its prices are competitive. A 64-ounce carton of Horizon milk was $3.50 on Wal-Mart’s site, $3.99 from Peapod and $4.29 on Fresh Direct.

Sixteen ounces of celery at Wal-Mart to Go was $1.98, where 16 ounces of celery at Peapod was $3.29 and at Fresh Direct $3.49.

On shelf-stable food like crackers and candy, Wal-Mart had a broad selection — it sells 12 varieties of Triscuits, for instance, versus 10 at Peapod and two at Fresh Direct.

Wal-Mart is the biggest grocer in the country — according to estimates from Janney Capital Markets, it has about 33 percent market share in the United States. Kroger has 9 percent, Safeway 5 percent, Supervalu 4 percent and Target 3 percent, according to Janney. And groceries account for more than half of Wal-Mart’s American revenue, excluding figures from Sam’s Club.

Craig Johnson, president of the consulting firm Customer Growth Partners, said that the move made some sense.

Wal-Mart’s big stores are patronized for large stock-up trips, not for on-the-go grocery shopping, he said, and the delivery could help address that issue.

Yet Wal-Mart would need to tackle questions like how to deliver groceries on a wider scale (use its own trucks? rent a fleet? use U.P.S.?), and how to handle and keep safe prepared foods like sandwiches or ready-made dinners rather than just basic groceries, Mr. Johnson said.

“These are not simple operations to set up profitably, as Webvan and a host of others have found out over the years,” he said.

Article source: http://feeds.nytimes.com/click.phdo?i=d04d425407ba3defe3f87858339dc661

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