Can Walmart beat Amazon and Instacart to win the battle for eGrocery?

Presented by: 
Stephanie RubinMarch 12, 2021

It’s hard to think of a busier time for eGrocery than the past 12 months, and few retailers have been busier than Walmart.

We’ve had news of more local fulfillment centers, more automation in the supply chain, large-scale technology and omnichannel tests, new checkout experiences, new drone delivery tests, the scrapping of the $35 minimum order requirement for its Express delivery service, and of course that Instacart partnership.

With so much going on, it’s easy to lose sight of the bigger, strategic picture. So, what does this buzz of activity tell us about Walmart’s underlying eGrocery strategy? And where does its approach leave it vis-à-vis competitors such as Amazon and Instacart?

The coronavirus pandemic delivered a huge shock to the system for retailers. As consumers looked for safe, convenient ways to shop, eGrocery adoption stepped forward by five to 10 years. By 2025, 21.5% of US grocery sales, worth $250 billion, are now expected to come via the online channel. That’s 60% more than had been forecast before the pandemic.

In responding to this acceleration in demand, Walmart has been guided by one main objective: to reach absolutely everyone in the United States.

Women shopping groceries online
Walmart is determined to meet growing demand from shoppers for eGrocery.

Walmart is finding new ways to reach shoppers

Over recent weeks and months, it has continually tested new ways to reach more shoppers and tried out new fulfillment strategies. In the process, it’s become more agile, more daring, and more willing to experiment.

Nowhere is this more apparent than in its partnership with Instacart. After years of not wanting to partner, Walmart bit the bullet last August and teamed up with the last-mile specialist to offer same-day delivery on grocery items in four US markets.

It’s a smart move for several reasons. Foot traffic in stores is down in the wake of the pandemic, so the pressure is on for retailers to figure out how to reach more people through eCommerce. Partnering with Instacart allows Walmart to respond to booming demand for online grocery right now, while keeping its options open for the longer term.

Crucially, the customer experience is right on the money. The assortment is broad, delivery is fast and reliable, and highly competitive prices mean shoppers are still getting the quintessential Walmart experience.

The partnership also plays into another strategic priority for Walmart: Walmart Plus, its fledgling membership and delivery subscription program. Designed to be a competitor to Amazon Prime, Walmart Plus has the potential to transform Walmart’s eCommerce business.

To make good on this promise, however, Walmart will need to match Amazon on delivery speed. It has made lots of progress in this area already – it is now offering two-day delivery on many items and next-day on some – and providing same-day delivery via Instacart would boost its delivery capabilities even further.

Walmart optimizing its eGrocery options to meet growing shopper demand.

How stores give Walmart an edge

Innovative last-mile partnerships are just one way Walmart is looking to maximize its reach. It is also laser-focused on leveraging its biggest asset: its unrivalled network of stores.

Roughly 90% of the US population lives within 10 miles of a Walmart store, giving Walmart a huge platform to capitalize on the growing popularity of store and curbside pickup. At the end of 2020, it had nearly 3,200 grocery pickup locations around the country –  more than six times the number offered by Amazon’s Whole Foods Market

It’s no surprise, therefore, that stores are right at the heart of the next phase of Walmart’s eGrocery plans. And those aren’t just about facilitating pickup either. It recently announced plans to scale its automated supply chain, which will see a growing number of stores act as micro fulfillment centers capable of supporting pickup as well as to-home options.

Yet despite the advantages of its store base, Walmart’s victory in eGrocery is not a foregone conclusion. Parts of the shopper experience remain clunky, and better integration across Walmart’s grocery and main shopping platforms – as announced in early 2020 – is an urgent priority.

Walmart, like all eGrocery retailers, must also stay focused on getting the basics right. To this day, one of the biggest purchase barriers for online grocery is that shoppers do not trust somebody else to pick their produce for them. This leaves retailers with little margin for error: one bruised apple, brown banana or moldy strawberry is all it takes to undermine customer confidence.

Walmart is alive to this and regularly highlights the importance of its team of 170,000 trained personal shoppers. With good reason. As retailers fight to hold on to new customers gained during the pandemic, quality and customer experience are set to become major battlegrounds in eGrocery.

Competitors are also piling on the pressure. Although Amazon has struggled in grocery in the past, more recently it’s done an impressive job of integrating Whole Foods Market into the wider Amazon ecosystem and created a great experience for grocery delivery. What’s more, plans to open up to 1,000 micro delivery hubs across the United States could help it close the gap on Walmart’s physical retail footprint.

The dynamics between Walmart and Instacart are even more interesting. In many ways, their partnership tells the story of how retailers’ priorities have shifted over the past 12 months. Pre-Covid, Walmart reportedly baulked at Instacart’s marketplace model, specifically its insistence on listing items from all partner retailers in its own app. Post-Covid, with reach and speed the top priorities, concerns about owning the shopper journey have clearly taken a backseat.

Also taking a backseat are old definitions of what it means to ‘win’ in eGrocery. With a $39 billion valuation and a share of more than half of the US online grocery market by some estimates, Instacart is a serious eGrocery player in its own right. Recent speculation about the future direction of its business model only serves to underline this.

instacart-groceries-car-delivery
Instacart groceries being delivered

Walmart is taking the long view on eGrocery

That Walmart is nevertheless willing to explore potential synergies suggests it knows there is more to winning than ‘beating’ everybody else. In this new normal, collaboration could be the smarter, more sustainable option.

Of course, only time will tell if this turns out to be true of the Walmart/Instacart partnership. It’s a limited trial at this stage, but it has the makings of a game changer. If Walmart feels the partnership is successful and decides to roll it out to more markets, it could expand its reach even beyond its current base.

The battle for eGrocery will no doubt continue over the coming months and years, and we won’t know the victor for some time. But if success is about strategic clarity and playing to your strengths, you wouldn’t want to bet against Walmart right now.

Like to talk to us about how you can adjust your current digital shelf strategy to maximize category growth within Walmart? Then book a free demo with our eGrocery experts today.

Share

All the digital Shelf Analytics You Need to Succeed at Speed & Scale
See why world leading brands choose e.fundamentals for actionable digital shelf insights

Request A demo

Latest Resources

Online category management: 5 principles to help CPGs succeed on the digital shelf

Little attention has been paid to what the shift to online means for CPG category managers. We've summarized the 5 principles for successful online category management.

Read more

Key pillars of shopper marketing and insights on the digital shelf with DIAGEO #21

According to a recent survey by the Path to Purchase Institute,  53% of shopper marketing teams report into marketing and 33% report into sales. For a relatively mature discipline across…

Listen now

Data that matters | The FMCG Guys podcast #20

Jo Campbell, e.fundamentals SVP of Operations sits down with The FMCG Guys podcast to discuss what data really matters to CPG eCommerce success.

Listen now

What is digital shelf analytics? Maximize eCommerce sales growth with retail insights

Read our summary of what digital shelf analytics is and why they're an indispensable tool for brand owners looking to grow their category share online.

Read more

How CPGs can optimize trade promotions and boost unit economics amid inflation

Trade spend is notoriously prone to inefficiencies, but smart revenue management backed by digital shelf analytics can help dramatically eliminate waste. Read on to learn how.

Read more

The ultimate guide to retail media & marketplaces #19

Retail media advertising is exploding and the space is evolving so rapidly that it’s hard for brands to keep pace. Listen to Ben Taylor, EMEA Head of Omni-channel Commerce at…

Listen now

View Our Most Popular resources to help you learn and win on the digital shelf.

the ultimate guide to content management on the digital shelf thumb

The Ultimate Guide to Content Management on the Digital Shelf

Maximize ecommerce sales with optimized Content with our ultimate guide made in partnership with Salsify.

The Digital Shelf Cast - Listen to our latest episode

A monthly podcast for CPGS covering the latest trends in grocery and digital ecommerce.

Digital Shelf Analytics - Buyers Guide

Complimentary Gartner Report Download innovation insight for Digital Shelf Analytics. 
e.fundamentals is the leading digital shelf analytics  provider for CPG brands looking to analyze, measure and optimize eCommerce performance. We turn complex data from hundreds of retailers into actionable insights that enable eCom teams to take fast actions to drive sales and conversion on the digital shelf.

UNITED STATES

Chicago

444 West Lake Street, 
Suite 1700, 
Illinois, 
Chicago, 
60606
+1312 416 8580

UNITED KINGDOM

London

20 St Thomas Street, 
2nd Floor Runway East,
London
SE1 9RS

Members of

CMA SIMA Logo
Copyright © 2020 – e.fundamentals (Inc) Ltd All Right Reserved Reg No. 11020663