Walmart is speeding up its act in New York, a market where it doesn't have a single store. The retail giant acquired Parcel, a New York-based same-day and last-mile delivery startup specializing in perishable grocery and other delivery to customers in the city.
Walmart said it will use Parcel to provide so-called last mile delivery of both general merchandise and fresh and frozen groceries from both Walmart and its Jet.com unit, which already is offering same-day delivery of some orders for free in New York. Walmart said Parcel’s 24/7 business also offers packages overnight and in scheduled two-hour windows in addition to the same-day service. The start-up’s service counts among its competitive differences an employee-based workforce instead of contractors. It sends customers and clients live text updates to update them on the delivery process.
The need to compete on the fast delivery front isn’t lost on retailers. Some 51% of retailers in a BRP (Boston Retail Partners) survey published recently said they offer same-day delivery this year, up from 16% last year.
Walmart declined to disclose how much it paid for Parcel, except to say the deal size is smaller than its other transactions this year, which included the $310 million purchase of men’s apparel brand Bonobos.
“New York City is the top market for both Jet and Walmart.com,” said Nate Faust, senior vice president of Walmart U.S. eCommerce Supply Chain, in a blog post on Tuesday. “This acquisition allows us to continue testing ways to offer fast delivery while lowering our operating costs. Delivery is increasingly one of the most important elements for today’s online shoppers, as demands for speed, flexibility, and reliability continue to grow.”
A 2016 PwC survey of more than 350 global retail and consumer goods CEOs for JDA found that only 10% of them said they were able to make a profit while fulfilling so-called omnichannel demand because of delivery and other supply chain complexities.
Walmart’s US ecommerce chief Marc Lore hinted about the deal last week in an Advertising Week conference, promising Walmart would offer same-day delivery service in New York soon. Lore also said at the time online fresh goods delivery is “the next breakthrough.” He pointed out examples such as Walmart’s test of employees dropping off customer packages. Lore said they require on average less than a quarter mile of additional travel-- an edge that he said will help Walmart deliver fresh goods in a 2-hour delivery window cheaper than its rivals. Walmart also is testing grocery delivery with Uber in 20 to 25 stores, spokesman Ravi Jariwala said.