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Walmart Just Might Win The Shipping War With Amazon. Here's How

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Getting in a shipping war with e-commerce behemoth Amazon is generally seen as a fool’s game. But Walmart is the one retailer who actually might be able to win that war.

Walmart and Amazon have been upping the ante on each other in their bids to offer the fastest deliveries, causing analysts to predict the war will end badly for Walmart.

Neither side shows any sign of backing down – and from the jabs on their Twitter accounts, it is clear this fight is personal.

Amazon announced on April 25 that it would spend $800 million to make one-day shipping standard for Prime member deliveries. Walmart today said it is ready to roll out next-day delivery in three states and will be able to offer it to 75% of U.S. consumers by the end of this year.

Retail watchers are predicting the shipping wars will end in a pyrrhic victory, after insane amounts of delivery escalation, from drone drop-offs to delivery vans parked outside every door waiting to instantly fill orders. Walmart, the argument goes, can’t win if Amazon sets the agenda with new offerings and Walmart blindly rushes to keep pace.

Here are some reasons Amazon may be more worried about Walmart than the other way around:

• Walmart has the infrastructure it needs in place and Amazon is still building it. While Amazon continues to look for locations for new fulfillment centers, 90% of Americans already live within 10 miles of a Walmart store.

• It is hard to say who is chasing, and who is playing catch-up. Walmart e-commerce CEO Marc Lore told Business Insider that Walmart has been working on the move to next-day delivery for two years. While Amazon already offers one-day and one-hour deliveries on certain products in certain markets, it has not said when it will be ready to make one-day deliveries standard. Walmart executives already are looking ahead to what they call the real battle: same-day shipping.

• Walmart is doing a lot of same-day delivery of groceries and says it is on target to offer that service from 1,600 stores by year-end.

• While Amazon has more online grocery shoppers than Walmart, the percentage of online grocery shoppers who bought from Walmart jumped dramatically this year to 37.4%, up from 25.5% in 2018, according to a study released today by Coresight Research.

• For many customers, pickup in store is preferable to delivery, if it is done right. Customers who don’t have the luxury of being home when a package arrives, or a secure drop-off location, often prefer the option of picking the item up in-store, if a store is nearby and pickup is convenient and easy.

• Walmart has invested in automated pickup towers for online orders in its stores and has drive-up locations for grocery pickup that can also be used for other orders.

• Don’t forget about the $119 Prime membership fee. As Walmart likes to point out in its Twitter jabs, their speedy shipping is free, provided you spend $35 or more.

Something to remember in the shipping wars is most of the time consumers don’t need that purchase next day. But it is nice to know fast shipping is available when you need it. If retailers, whether they are Amazon, Walmart or Target, convince you they are the fastest option with the most products available, you are more likely to try their website first. And the first site you go to is most likely where you will buy.

Walmart’s unveiling of its state-of-the-art pickup towers in its supercenter in Secaucus, New Jersey, in November 2017 illustrates why Amazon needs to be worried about Walmart, and why Wall Street analysts and other city dwellers (with doormen to accept packages) may be giving Amazon too much of an edge in this fight.

One of the first customers to use the pickup tower, James Fisher of Union City, shocked New York-based financial media gathered for the unveiling when he said he used the pickup-in-store option because it was easier than getting it from Amazon. “How can it be easier than getting it delivered to your door?” incredulous reporters asked him repeatedly.

Fisher spelled out his path to purchase, giving valuable insight into how consumers act. The Walmart store was close to his home, and he had heard of the pickup-in-store option, so he went to Walmart.com to order some USB cables. The ones he wanted weren’t immediately in stock but could be in the store within three days. He opted to get them delivered to the store in three days rather than navigate to Amazon or another website and search for a quicker option.

He liked the price, he liked the information on the Walmart site, and he liked knowing they would be waiting for him at the store in three days. He checked Walmart.com first because there was a Walmart store nearby, and that is Walmart’s best weapon in the shipping wars.