Just a week after an earnings report that exemplified Walmart’s omnichannel successes, the company is placing a big bet that its delivery network can outshine other last-mile options available to retailers and merchants, including the delivery services of rival Amazon, as it looks for ways to diversify its revenue streams.
Walmart GoLocal, unveiled Tuesday (Aug. 24), is a white-label delivery-as-a-service (DaaS) model developed from Walmart’s own ability to launch and scale delivery capabilities for its own customers through its Spark Driver platform. Walmart said its delivery network currently reaches nearly 70 percent of the U.S. population, a share that is growing as the company invests in drones, autonomous vehicles and market fulfillment centers.
Read more: Walmart Launches GoLocal Last-Mile Delivery For Other Retailers
Earlier this year, Walmart strengthened its partnership with on-demand drone delivery startup DroneUp in an effort to speed delivery and meet increasing consumer demand. The retailer first partnered with DroneUp last year and launched a pilot program to deliver at-home COVID-19 self-collection kits.
Related: Walmart Drives DroneUp Partnership With New Investment
Chief Financial Officer Brett Biggs said last week that over the past 12 months, the Spark Driver platform’s coverage has doubled to more than 500 cities across the U.S., providing access to more than 20 million households.
“The Walmart business model is evolving, and these newer businesses are contributing to results in a more meaningful way,” Biggs told investors and analysts on a conference call.
Sizing Up The Competition
The GoLocal move comes as a challenge to existing last-mile delivery services such as FedEx and United Parcel Service (UPS), though their same-day delivery capabilities are limited based on existing operational infrastructure. UPS earlier this year began piloting same-day delivery but details on the project are scarce. FedEx already offers same-day delivery in some locations and has been testing the use of robots to beef up local delivery offerings.
Shipt also provides same-day deliveries from parent company Target and other retailers, while DoorDash, Instacart and Uber use gig workers to make deliveries for a variety of merchants, potentially making it difficult for Walmart to find a way in even with its name recognition.
For Walmart, though, GoLocal is more than a pilot or a test — the omnichannel retailer has spent several years perfecting its delivery capabilities for its own operations, allowing it to position itself to other retailers as a peer who knows what it takes.
“In an era where customers have come to expect speed and reliability, it’s more important than ever for businesses to work with a service provider that understands a merchant’s needs,” said John Furner, president and CEO of Walmart U.S.
To be sure, Amazon also supplies logistics capabilities to competitors through its Amazon Multi-Channel Fulfillment (MCF) unit, which offers packing and delivering services to eCommerce merchants on Shopify, Etsy and even Walmart, though Walmart has prohibited its sellers from using Amazon logistics.
See: Amazon Supplies Logistics To Rivals
Since 2019, Amazon’s MCF business has doubled its capabilities and the company recently began lowering its prices to attract more businesses to use its logistics services. In July, BigCommerce integrated Amazon MCF into its platform to allow merchants to more easily fulfill eCommerce orders regardless of whether they sell on Amazon.
Branching Out
The launch of GoLocal is also part of a larger push by Walmart to diversify its revenue streams through initiatives such as Walmart Connect, an advertising platform formerly known as Walmart Media Group, and Walmart Fulfillment Services, which allows select marketplace sellers to utilize the retailer’s supply chain capabilities.
Last month, Walmart said it would begin licensing its technologies and digital capabilities to other brands and businesses looking to bolster their digital and physical presence. The retailer also teamed up with Adobe to integrate Walmart’s Marketplace, eCommerce, and in-store fulfillment and pickup technologies with Adobe Commerce, which offers solutions for merchants and brands.
Read more: Walmart To License Its Digital Tech
“Our tech and product teams have made a lot of progress modernizing our technology and way of working,” Walmart CEO Doug McMillon said last week. “We’re starting to see the fruit generated by their efforts as we build innovative solutions that have utility across the enterprise.”
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