Walmart rolls out free next-day delivery service

Walmart plans to reach 75% of the United States with free next-day delivery on orders above $35 this year

Walmart plans to reach 75% of the United States with free next-day delivery on orders above $35 this year

It will roll out gradually over the coming months, with a plan to reach approximately 75% of the US population this year, which includes 40 of the top 50 major USA metro areas.

The service starts today in Phoenix and Las Vegas, with expansion to Southern California in the coming days.

Amazon figured to spend $800 million this quarter on shortening delivery times to a single day for Prime buyers, with shoppers in North America expected to be the first to benefit.

As it has for much of its existence, Amazon upped the ante for competitors around customer convenience.

Walmart (WMT) has announced that it will begin offering free next-day delivery on online purchases made from its website without a membership fee. The free next-day delivery is only eligible on orders of $35 or more, and Walmart said it is offered only "on specific assortment varying by customer location".

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"We can offer fast, convenient shipping options because we've built a network of fulfillment assets that are strategically located across the US".

"We have been working on this since I have gotten here...we have been building out the infrastructure for the last few years to support this", said Lore, who joined the retailer in 2016 when it acquired his company, Jet.com. Amazon Prime was launched in 2005, offering free two-day shipping for an annual fee of $79.

"Contrary to what you might think, it will cost us less - not more - to deliver orders the next day". One-day shipping on general merchandise offers a complement to that offer.

O'Shea pointed to Walmart's store base as critical to its convenience and delivery propositions. The U.S. business could see a drag on operating margins of 5 basis points on an annualized basis and 3 basis points for Walmart overall over a similar period if they follow Amazon's one-day shipping offer, the note says.

Historically, Walmart has been behind Amazon in the e-commerce arena. The key questions going forward, they noted, are the number of available products and the "consistency of delivering on the shipping promise". The analysts said that Amazon's likely goal is same-day delivery for Prime members. Visit MarketWatch.com for more information on this news.

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