NEW YORK (AP) — Walmart is rolling out a grocery delivery subscription service this fall as it races to gain an advantage in the competitive fresh food business.
The service will charge an annual membership fee of $98 for subscribers to access unlimited same-day delivery, which will be offered in 1,400 stores in 200 markets. By year-end, it will extend to a total of 1,600 stores — or more than 50% of the country.
The move allows the nation's largest grocer to further tap into time-starved shoppers looking for convenience at a time when Walmart is locked in an arms race with Amazon and others to expand fresh-food delivery — one of the fastest growing e-commerce sectors.
"We know this level of convenience resonates" with our customers, said Tom Ward, senior vice president of digital operations at Walmart U.S. "If you need milk, bananas and birthday presents, this is a fantastic solution."
The grocery services will be fulfilled by local stores and require a minimum order of $30. With same-day delivery, there's a four-hour minimum wait time between placing order and having it delivered. Walmart will also allow shoppers to order groceries online and pick them up at their local store or curbside for free. Curbside pickup is available at 3,000 stores and will expand to another 100 stores by the end of the year.
About 100,000 items, which include fresh food and pantry staples as well as select general merchandise like lightbulbs and basic toys, qualify for both grocery pickup and delivery. Walmart will also offer a monthly subscription option for $12.95; customers will still be able to pay a per-delivery fee of $7.95 or $9.95 for same-day delivery if they decide against the subscription service.
Walmart says it will rely on its more than 45,000 personal shoppers to pick products off store shelves to fulfill orders. It will also continue using the same patchwork of delivery services as before, including Postmates and DoorDash.
Walmart is facing increasing pressure to expand its fresh grocery delivery service amid fiercer competition in that space. About two years ago, its key rival Amazon purchased Whole Food Market Inc. and now is offering same-day grocery delivery in various cities. Meanwhile, AmazonFresh costs $14.99 a month and is available to Amazon Prime customers, who pay an annual membership fee of $119, in select cities.
Grocery delivery startup Shipt, whose store partners include Costco and Piggly Wiggly, currently charges $99 annually. Target, which bought Shipt in December 2017, announced in June a new option for Shipt shoppers to pay a per-order fee of $9.99 for the first time. It also integrated Shipt on Target.com. And last year, Instacart slashed its annual subscription fresh grocery service fee to $99 from $149.
Amazon changed consumer expectations when it launched two-day delivery for Prime members back in 2005 and forced other retailers to step up their game. But then the online behemoth needed to cut the delivery time in half to make its membership more attractive since others like Walmart offered free two-day deliveries without any membership.
This past spring, Amazon cut its two-day delivery to one day for Prime members. Soon after, Walmart began rolling out free next-day delivery for its most popular items with a minimum order requirement of $35 . It plans to roll out the service to 75% of the U.S. population by year-end.