(Bloomberg)—Walmart Inc., No. 3 in the 2021 Digital Commerce 360 Top 1000, will start delivering goods for other companies, a bet that its logistics prowess will let the world’s largest retailer broaden its business.
The new service, dubbed Walmart GoLocal, will offer merchants ranging from local bakeries to national auto-supply stores deliveries across the U.S. at what the company calls “competitive pricing.” The retailer already has some contracts with clients, Walmart said in a release Tuesday.
The delivery service is CEO Doug McMillon’s latest move to diversify Walmart’s revenue away from its core operations amid intense competition from Amazon.com Inc. and other rivals. In January it created a fintech startup, and in recent years Walmart has bulked up its digital advertising business, which it now calls Walmart Connect, along with unveiling a fulfillment service for merchants who sell goods on its third-party marketplace site.
Some of these recent moves have mimicked Amazon, and Walmart’s new delivery service puts it in a position that Amazon is familiar with—competing against longstanding logistics providers United Parcel Service Inc. and FedEx Corp. Amazon has built up a massive delivery apparatus, with volumes in the logistics arm of its business more than doubling over the past two years, the company said in an earnings call last month.
Walmart’s varied attempts to dig new profit pools have achieved mixed results. While its advertising business is thriving by all accounts, the company has provided no information on the performance of its Walmart+ subscription program that debuted last year. An earlier venture into streaming movies, under the Vudu brand, was sold off last year.
Walmart ramps up B2B services
Sylvain Perrier, president and CEO of grocery ecommerce platform Mercatus USA Inc., is skeptical about whether grocery retailers will choose Walmart as a delivery partner, but he understands why Walmart wants to get into the business.
“We can’t see any grocery retailer taking Walmart up on this–it’s too big of a risk to give up data and customers to the retail giant. However, this is a smart strategic play on Walmart’s part,” Perrier says.
Acting as a delivery partner allows Walmart to leverage its vast infrastructure, he says, while also erecting “a firewall” up against Amazon, other marketplace providers. The strategy also allows Walmart to give local merchants on its marketplace a fulfillment option that previously would’ve been handled by another service provider.
Walmart has been spreading its wings as a business-to-business service provider in other ways as well.
Last month, Walmart said it will start selling technology to help merchants offer in-store pickup. Walmart, which plans to market the software in early 2022, says the technology will help merchants show online shoppers items available to pick up in stores and help retailers show consumers multiple pickup options, including curbside and in-store. It also plans to sell mobile technology to help store associates efficiently pick items for store or curbside pickup and conduct more complex tasks. These include managing pickup substitutions, sending customers messages about their store pickup orders and offering BOPIS and curbside check-in.
As part of that announcement, Walmart also said that early next year, merchants using Adobe’s Commerce Platform would be able to syndicate their product catalogs and list items for sale on Walmart Marketplace. Adobe merchants will also have access to online and in-store fulfillment and pickup technologies from Walmart.
Walmart isn’t the first online retailer to see the opportunity in selling internally developed services and technology. U.K. online grocer Ocado Group Plc. (No. 25 in the 2021 Digital Commerce 360 Europe 500), for example, operates an Ocado Technology unit that develops and sells robotics, machine learning, simulation, data science, forecasting and routing systems to other online grocers, including U.K.-based Morrisons, Canada’s Sobeys Inc., Groupe Casino (parent of Monoprix SA in France) and The Kroger Co. (No. 8 in the Top 1000) in the U.S. And electronics retailer and marketplace Newegg (No. 25 in the Top 1000) has ventured beyond selling products online in recent years by offering logistics, customer service and staffing services to other ecommerce-focused companies.