BENTONVILLE, Ark.— Walmart is going to begin delivering groceries inside shoppers’ homes. Right to their kitchen refrigerators.
Starting this fall, nearly 1 million people across three cities — Kansas City, Missouri, Pittsburgh and Vero Beach, Florida — will have access to Walmart’s new in-home delivery option, the retailer announced Friday at its annual shareholders meeting in Bentonville, Arkansas. The company said it will “learn and scale” the option across the U.S. from there, not specifically outlining any further expansion plans.
Walmart’s in-home delivery project is headed up by Bart Stein. A Google alum, Stein joined Walmart a little more than a year ago from Wim, a hardware company he founded that hoped to be the so-called Keurig of frozen yogurt, to lead Project Franklin. Franklin is the second start-up to come from Walmart’s tech incubator, Store No. 8. In stealth mode, Stein’s been testing in-home delivery with Walmart in New Jersey.
The announcement comes as Walmart continues to vie with Amazon in a tit-for-tat war over offering shoppers delivery for items, like groceries, as speedily as possible. Both companies recently announced their ventures into next-day delivery, with Walmart promising to reach roughly 75% of American consumers with this faster shipping option by the end of 2019. Amazon, meantime, has launched several “Key” devices that allow orders to be delivered to customers’ homes, cars and garages.
The stakes to win at online grocery remain high, as the market grows. Some have predicted grocery delivery will “explode” in popularity, eventually, in the U.S.
Roughly 36.8% of U.S. consumers bought groceries online in the past 12 months, up from 23.1% in a 2018 study, according to Coresight Research, which estimates that’s almost 35 million more people across the country buying groceries online between 2018 and 2019. Still, just 2.2% of U.S. food-and-beverage sales were made online last year, Coresight said. And that’s expected to rise to about 2.7% this year.
The portion of people purchasing groceries online from Walmart in particular grew to 37.4% this year from 25.5% in 2018, a notable jump, Coresight said, in surveying 1,888 adults in the U.S. this past April.
Here’s how Walmart’s new, in-home delivery will work:
- Customers wishing to use the service must have Walmart install a smart lock on the outside of their home or garage.
- Then, they can place a grocery order from Walmart.com or the Walmart mobile app, selecting “InHome Delivery,” along with a specific delivery day, at checkout.
- They can opt to have orders delivered straight to the kitchen or to the garage.
- A Walmart employee will then be assigned to do the grocery shopping.
- At the scheduled delivery time, the assigned Walmart worker will use a proprietary, wearable camera device and enter a one-time code on a smart lock to access the customer’s home.
- This allows the customer to control the worker’s access into his or her home, and offers one the ability to watch the delivery remotely.
“Once we learned how to do pickup well, we knew it would unlock the ability to deliver,” CEO Doug McMillon said during an event with members of the media. “Imagine keeping homes in stock like we do stores.”
Walmart isn’t detailing the additional price of the in-home delivery service to shoppers until this fall, when it launches.
The company said the workers who are responsible for these delivery runs will be put through an “extensive training program, which prepares them to enter customers’ homes with the same care and respect with which they would treat a friend’s or family’s home.” It said these people must be with Walmart for at least a year, they’ll be vetted by the company and must have a W-2 form on file.
Later this year, it also expects to begin accepting returns this way, allowing shoppers to simply leave an item on the counter to be returned. And then one of Walmart’s in-home delivery associates will take care of the rest.
“There will be early adopters and then word of mouth will spread,” Walmart’s head of e-commerce in the U.S., Marc Lore, said about in-home delivery. “It’s like Airbnb.”
“There’s incredibly high perceived value,” with in-home delivery, Lore said, since Walmart is trying to save people time spent organizing the fridge.
And for Walmart, “you might think it’s a lot more expensive ... the time to get [groceries] into the fridge,” he said in an interview. “But we can batch the deliveries.” And so, “the actual delivery cost is a lot cheaper, [and] that offsets the timing to go into the home and fridge,” he explained.
Walmart will be able to do this at a “really attractive cost,” he said, hinting that the retailer will eventually be able to deliver general merchandise into the home, without any boxes. And not only would that be an environmentally friendly move, but it could be a huge cost saver for Walmart, Lore said.
Walmart also notably in 2017 announced a small test in the Silicon Valley area with smart-lock maker August Home, where it delivered packages inside customers’ homes and stowed away groceries in refrigerators. But that fizzled out. Stein said the in-home delivery rollout this fall, using Walmart’s own technology, is a “commercialization” of those efforts.
This story first appeared on CNBC.com. Get more at CNBC:
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