Walmart and third-party delivery company Deliv mutually agreed to end their grocery delivery partnership, Walmart spokeswoman Molly Blakeman told Reuters.
Walmart originally announced its intention to test grocery delivery through services including Deliv, Uber, and Lyft in 2016, and while pilots with all three services did occur, they’ve all come to an end now, even as Walmart looks to expand grocery delivery to more stores in 2019.
Multiple problems with the deliveries led both parties to agree to terminate the partnership.
- Walmart took too long to gather grocery orders and get them to Deliv drivers.Deliv workers often had to wait 40 minutes or more for orders because Walmart didn’t put orders together fast enough, sources told Reuters. Part of the problem was that Walmart prioritized in-store customers over delivery orders, potentially because associates were focusing on providing consumers with the best in-store experience possible to secure sales. Since Deliv is its own company and its drivers want to complete as many deliveries as possible, this difference in values proved problematic.
- Grocery delivery’s order volume was low in markets where Deliv operated. This made the endeavor less profitable for both Walmart and Deliv, as there seemingly weren’t enough orders to make the partnership worthwhile for drivers or the retailer.
Losing Deliv is only a small-scale problem for Walmart, but the issues that cropped up potentially pose widescale difficulties for its grocery delivery services. By the time the partnership ended in late January, Deliv was only working with Walmart at three stores in one market, according to TechCrunch.
For context, Walmart offers delivery from approximately 800 stores in 100 markets and still has partnerships with seven delivery companies. But if demand is flagging in other markets, grocery delivery may be struggling to gain adoption.
And as long as Walmart collaborates with outside companies that want to consistently make deliveries, if Walmart doesn’t get orders out fast enough, other companies may have the same issues as Deliv and look to end their partnerships as well.
Walmart needs to speed up the picking process for its grocery orders and should consider handling its deliveries on its own to solve these dilemmas.If the retailer can get orders ready faster it should have more success working with on-demand delivery services.
It could improve its ability to do so by assigning more employees to pick orders and expanding its automated Alphabot fulfillment system that it’s piloting. And if Walmart continues to struggle to align its values with those of delivery companies and their drivers, it may want to try handling deliveries itself.
Although this would be costly, it’d give Walmart more control of the process, and it may be even more viable if the retailer decides to employ consistent delivery routes, like Dutch online grocer Picnic.
Source: Business insider