Commentary

Walmart, Costco Deliver Against Amazon In Battle For The Home

Counteracting Amazon seems to be the imperative in any business plan these days and the world’s largest retailer is no exception. Stories with several distinct angles this morning offer insight into how the folks in Bentonville, Ark., are attempting to contain the folks from Seattle, Wash., (and a future second HQ in the Continental USA that has municipalities scrambling to outdo one another).

The New York Times’ Michael Corkery reports that grocery delivery, which Walmart launched about two years ago, “is now available in about 1,000 of Walmart’s 4,699 stores across the country” and is “the centerpiece of its strategy to gain the upper hand in the pursuit of consumers looking to streamline their food shopping.”

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This week, as Recode’s Jason Del Rey reports, Walmart purchased Brooklyn-based Parcel, a company that handles scheduled and same-day delivery services in New York for the likes of Bonobos and Martha Stewart’s Martha & Marley Spoon. It soon will be adding Walmart to its routes.

Uber drivers already deliver Walmart groceries in some cities, Corkery says. In a few others, the retailer will be testing a service where drivers deliver perishables to customer’s fridges (tracked by surveillance cameras). But “Walmart is betting that a big part of the country (‘from Scranton to Sacramento,’ one Walmart executive said) is more of a drive-through than delivery culture,” he writes. 

Although it cuts down on browsing other areas of its Supercenters, Amazon “believes that the ‘high touch’ approach of online grocery ordering is improving people’s opinion of the shopping experience at its stores, making them more likely to purchase general merchandise in addition to food,” Corkery points out.

At the Association of National Advertisers Masters of Marketing conference in Orlando, Fla., yesterday, Walmart CMO Tony Rogers “gave the audience … a sneak peek at the company’s upcoming holiday spot which touts free shipping,” reportsAdweek’s Kristina Monllos.

“‘Free shipping two-day for orders over $35,’ said Rogers, after showing the upcoming new spot. ‘No membership fee because, you know, we just don’t think you should have to pay $99 a year for the privilege of free shipping,’” Monllos writes. 

That $99 is, of course, the price of Amazon Prime membership.

Then again, Rogers also pointed out that “no longer is cost or price the top priority; instead, consumers say ‘My favorite retailer saves me time,’” as Marketing Daily’s Tanya Gazdik observes in her revealing roundup of CMOs at the conference discussing how they thrive even as the demands of their responsibilities expand.

Costco, whose executives also have their eyes glued on Amazon from their perch in Issaquah, Wash., yesterday itself announced two new delivery options.

“Starting this week, Costco Grocery will offer nearly 500 non-perishable items that will be delivered in two days, with orders over $75 dropped off for free. Meanwhile, a separate service offered at 376 stores in the U.S. will give customers the choice of roughly 1,700 items, including fresh groceries, and has the option of same day delivery,” Charisse Jones reports for USA Today.

Meanwhile, in the “the enemy of my enemy is my friend” department, Walmart is offering a $25 coupon on any future order placed on Google Express — which it partnered with in August — after purchase of a Google Home Mini or Google Home, which were unveiled Wednesday, Dennis Green reports for Business Insider.

“Walmart is now the largest vendor on the Google Home platform, which also includes retailers like Target, Costco, and Stop & Shop,” Green writes. “Customers can link their Walmart and Google accounts, allowing for integrated features like a shortcut to reorder items frequently bought from Walmart through the Google Assistant voice software. This goes deeper than any other vendor agreement on Google Express.”

There’s something in this for Google, too, of course, which is going head-to-head with Amazon’s Alexa on the voice-activated shopping front.

“According to the latest data from Accenture, 89% of shoppers in 2017 are familiar with Alexa, while 77% are familiar with Google Home. Nearly three-quarters (71%) of shoppers are using or would like to use Alexa, while 68% responded in kind about Google Home,” reports Tonya Garcia for MarketWatch.

“Experts argue that it’s still early days for voice commerce, so even if there has been buzz around Alexa and the Echo products, there is room for others,” Garcia continues.

“Owning the home is an emerging strategy,” Kathy Gersch EVP of strategy execution and change management at Kotter International, tells Garcia.

It’s an emerging strategy for Millennials, too, although a Harris Poll released in August “found that that 33% of Millennial home buyers’ decision to buy a home was driven chiefly by their dog.”

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