Walmart (WMT) has begun testing a two-day free shipping membership service and is building up its regional network to help speed up delivery times and keep pace with Amazon.com (AMZN) and its growing Prime service.
This effort builds on a test Walmart began last June when it launched a three-day delivery service, a pilot for which there is a waiting list. The Walmart unlimited free delivery program, called “ShippingPass,” costs $49 a year (down from $50 initially), or about half of what Amazon charges for Prime which also offers free two-day shipping (though includes other perks like Amazon’s music and video streaming services.)
To be able to offer the speedier delivery, Walmart is tapping eight massive e-commerce warehouses around the country, the last of which will be built by the end of 2017. Walmart, which in the last few years has invested billions into its e-commerce infrastructure on everything from using stores to help fill online orders to expanding a grocery curbside pickup program, is also making use of 80 of its 4,600 stores to send orders and be closer to customers and cut down on time. (Those stores are deployed primarily to send quick turnover and frequently ordered items like diapers and other baby goods.)
The retailer, whose e-commerce sales were only one-sixth those of Amazon’s last year, will turn to regional carriers to deliver more of its packages, relying less on its primary carrier, FedEx (FDX), the Wall Street Journal reported.
Walmart has its work cut out for it. Amazon has also been working on speeding up its delivery times, including same-day delivery, adding to the pressure on brick-and-mortar retailers in general. Its Prime program also has about 54 million U.S. members, giving it an enormous head start.
In the last 12 months, Walmart U.S. e-commerce sales rose to $12.5 billion, according to eMarketer, enough to make it the #2 e-commerce store. But that compares to $82.8 billion at Amazon, whose e-commerce rose even faster.