Photo by Luis Quintero from Pexels
By Dan Bolton
Walmart and Amazon benefitted enormously from the surge in e-commerce grocery order and delivery. Now both are aggressively moving to maintain that momentum as Walmart introduces Walmart+ and Amazon increases its store count and announces 1,000 neighborhood delivery hubs.
Amazon Pantry, launched three years ago and since expanded to nine countries, allowed Prime members to receive non-perishable food products and household items for a flat delivery fee. Delivery is now free on orders totaling $35 or more.
The success of the program led Walmart to follow with its own version of Amazon Prime, which costs $119 per year. Walmart+ is priced at $98 and includes unlimited free delivery from stores, including groceries, as well as a 5-cent fuel discount at the company's 2,000 Walmart and Murphy Express gas stations. The program launched in mid-September and requires a minimum $35 order.
Walmart added millions of new customers during the past six months, many in proximity to one or more of its 4,7000 stores. The company generated $21.5 billion in e-commerce sales. Amazon posted a record profit of $5 billion on $89 billion in sales during the three months ending July 2020.
In 2019 nearly half of Amazon's $3 billion in grocery sales were earned in the coffee, tea, and snacks categories. Coffee alone accounted for $1.2 billion in sales in the 52 weeks ending in May. Grocery sales tripled during the second quarter as the pandemic boosted an already impressive 45% growth in 2018. To meet demand, Amazon hired 175,000 workers this spring and is expanding its physical retail locations and adding up to 1,500 small neighborhood hubs in vacant mall store fronts and now-empty big-box stores, according to Bloomberg.
. Amazon now offers grocery pickup at 480 of its Whole Foods Market stores. The company opened its second Go Grocery store in Redmond, Wash. in September. The 13,000-sq.-ft. store sells fresh produce, is stocked with 5000 products, including baby foods and supplies, and is equipped with a kitchen to prepare breakfast and lunch items. Shoppers Just Walk Out, using the company’s no-cashier payment system. Additional Go Grocery locations are planned for Washington, DC.
The Go Grocery format stores are more than double the size of Amazon's 26 Go convenience stores, which are expected to add hot food and cold beverage fountains. Go stores range in size from 450 sq. ft. to 2,700 sq. ft. Amazon also operates an Amazon Fresh location in southern California with Alexa sales support and Dash Cart checkout lanes and will soon open Amazon Fresh stores in Chicago and Philadelphia.
Editor's note: Updated Sept. 15 to include details about Amazon's neighborhood distribution hubs.