Walmart to expand grocery delivery from 6 markets to over 100 by year-end

Walmart announced that it will expand its online grocery delivery service to more than 40 percent of U.S. households by year-end, growing from its current availability in just six markets to over 100 metro areas during that time. That means it will be making deliveries from 800 stores in total. The news is the latest salvo in Walmart's quickly escalating war with Amazon, which just last month announced Whole Foods grocery delivery was available via Prime Now.

But unlike with Prime Now, ordering groceries online from Walmart doesn't require a subscription of any kind - only a minimum order of $30.

Customers place their orders via Walmart's dedicated website, walmart.com/grocery, or the standalone Walmart Grocery app. At checkout, they select the window when they want to pick up their groceries curbside, or have them delivered - sometimes as soon as same-day.

Curbside pickup is free, while delivery costs an additional flat fee of $9.95.

The grocery service tends to be more affordable than rivals, which is perhaps Walmart's key advantage in this space.

Whole Foods, for example, was known for being notoriously expensive - it was even dubbed "Whole Paycheck" as a joke. And recent reports indicate that, despite Amazon's price cuts, some items have been creeping back up in price again.

Meanwhile, unlike grocery delivery services such as Instacart and Shipt (the latter which was recently acquired by Target for $550 million), Walmart doesn't mark up the cost of groceries sold online. They're the same price as in Walmart stores.

Walmart has been investing in online grocery for years, starting with limited tests of curbside pickup that later expanded across the U.S.

More recently, it began working with partners like Uber to trial grocery delivery in select markets including Dallas, Denver, Orlando, Phoenix, Tampa and San Jose. The expansion of grocery delivery in 2018 will continue to rely on "crowdsourced delivery services," says Walmart. For now this includes Uber and Deliv, but the company tells us more will be added to that lineup soon.

Relying on third-parties for delivery could ultimately be a disadvantage, however. For example, when I recently tried to change a pickup order to a delivery, Walmart simply couldn't handle making the switch. The only option was to cancel the entire thing and start over, I was told.

Amazon is not the only threat Walmart faces. The retailer also recently took on meal kit delivery services, such as Blue Apron and HelloFresh. Earlier this month, it added prepped kits and ready-to-cook items to its online grocery selection, for example, in order to cater to home cooks who don't have time to shop and prep ingredients.

In the past, Walmart has more heavily pushed grocery pickup as the option that made the best sense for its cost conscious customers who don't want to pay delivery fees. But it can't ignore consumer demand for grocery delivery forever.

However, with both grocery pickup and delivery, Walmart is able to leverage its square footage to its advantage. It can house online orders in big coolers in the back ahead of customers' arrival, and it can repurpose existing store staff to prep the online orders as they arrive.

Walmart says it today employs over 18,000 personal shoppers and plans to add thousands more over the course of 2018 as its online grocery service expands.

These employees have to first complete a three-week training program to learn how to prepare online orders, which involves learning how to pick the best produce or the best cuts of meat.

There are now 1,200 stores offering grocery pickup, up from over 900 in 2017, 600 in 2016, and just 100 in 2015. Walmart says it will expand curbside pickup to 1,000 more in 2018.

“Our commitment goes further than saving customers money,” said Tom Ward, vice president, Digital Operations, Walmart U.S., in a statement. “Ninety percent of Americans live within 10 miles of a Walmart store, and we serve more than 150 million customers a week, which gives us a unique opportunity to make every day a little easier for busy families.”