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Walmart's Latest Move to Step Up Online Grocery Delivery Game

Zacks Equity Research

Walmart Inc. WMT made yet another move to enhance grocery delivery services by joining hands with Point Pickup, Skipcart, AxleHire and Roadie. These collaborations are expected to strengthen Walmart’s online grocery delivery service in four states, with plans of greater expansions going ahead.

Notably, Walmart has been stepping up its online grocery delivery game for quite some time now in an effort to counter Amazon’s AMZN growing dominance. Courtesy of such efforts, Walmart Grocery Delivery can be now availed across more than 800 stores, with plans to add another 800 this year. In fact, considering the rising demand for online grocery, major retailers like Kroger KR and Target TGT are undertaking efforts to expand in this arena to stay afloat in the retail game.

Coming back to Walmart, the company is committed to enrich consumers’ experiences by providing easy shopping methods and seamless grocery deliveries. To this end, the company’s alliance with Jet.com and Blue Apron to provide on-demand meal kits is noteworthy. Also, Walmart recently raised its stake in Dada-JD Daojia to 10% to strengthen its last-mile delivery service and further enhance omni-channel offering. In an earlier development, the company inked a deal with Postmates to extend its online grocery delivery service to cover more than 40% of the families in the United States.

Also, the company’s contract with DoorDash, acquisition of last-mile delivery service Parcel Inc along with the move to introduce a completely new line of kitchen products in collaboration with Buzzfeed’s Tasty, highlights focus on enhancing grocery sales. Further, the company’s Walmart Pickup program enables customers to place orders online and then pick them up at a store for free. Moreover, Walmart partnered with ride hailing services Uber and Lyft for quick online grocery deliveries, while it tested same-day delivery with Deliv to enhance its services further.

Strength in online grocery sales along with other e-commerce efforts boosted Walmart’s overall U.S. e-commerce sales in the third quarter of fiscal 2019. During the quarter, U.S. e-commerce sales surged 43% (better than 40% growth recorded in the second quarter). E-commerce sales improved on the back of enhanced online assortment and increased grocery pickups. These factors keep management encouraged about achieving 40% U.S. e-commerce sales growth in fiscal 2019.


Backed by such upsides, shares of the company have gained 10.2% in the past six months compared with the industry’s rise of 9.5%. Let’s see if consistent focus on online grocery delivery can fuel further growth for this Zacks Rank #3 (Hold) stock.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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