By 24/7 Staff / www/supplychain247.com / May 8th, 2018
Walmart's online grocery delivery partnerships with ride-hailing services Uber and Lyft have ended, according to Reuters, a potential setback for the retailer's ambitions to challenge Amazon.com head-on with the speedy delivery of groceries to people's homes.
As reported by Reuters, the end of the Walmart partnerships, which has not been previously reported and was confirmed by Walmart and Uber, undercuts a vision the ride-hailing companies laid out: a service that can efficiently deliver anything on-demand, including people and cargo, at the touch of a smartphone app.
“It is incredibly hard to deliver people and packages together,” said a source with a delivery company that works with Walmart and has direct knowledge of the matter. “They are two completely different business models.”
Uber’s grocery delivery service was launched and expanded to four markets. As recently as March, just before Uber ended the arrangement, Walmart said Uber would be a partner in its plans to deliver groceries to more than 40 percent of the country.
“There was clearly some lack of communication there,” said one of the sources with knowledge of the partnerships ending.
Walmart spokeswoman Molly Blakeman confirmed the end of the tie-ups when asked by Reuters, but did not detail the reasons behind the decision.
She said Walmart will use other delivery service providers in the four markets where it had previously used Uber.
“Customers shouldn’t notice any difference as the transition takes place,” said Blakeman, who added that the partnership with Lyft never expanded beyond the initial test market of Denver.
Blakeman said the end of the partnerships will not impact Walmart’s plans to scale grocery delivery as they are not tied to any single provider.
Bloomberg reports that the defection is a hiccup for Walmart’s online grocery service, which is expanding this year from six cities to more than 100 markets to battle Amazon.com Inc., Instacart Inc.’s network of grocers and Target Corp.
The program has been a hit with shoppers, and Walmart sees it as a way to get more of its regular customers buying online, where they spend twice as much as in the store. Walmart’s web business stumbled from logistical snafus during the holiday period, so investors are looking at next week’s first-quarter results to show some improvement.
Walmart could also look to handle deliveries on its own, possibly through an acquisition, according to Kantar Retail analyst Robin Sherk. Last year Target acquired Shipt to help expand its delivery capabilities.
“Same-day demands are not going away, particularly as online grocery accelerates,” Sherk said.
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