Amazon and Walmart are pushing to make their fast delivery options even faster.
While many smaller shippers are opting for slower, lower-cost delivery services, the retail rivals are strengthening their already robust in-house logistics capabilities to boost delivery times and grow their same-day reach to more U.S. shoppers. Amazon is further optimizing and growing its fulfillment network, while Walmart is shipping many orders directly from stores.
"Whether it’s being delivered from a store, a club, or a fulfillment center, or whether it arrives on the ground or through the air with a drone, we’re getting things to people faster," Walmart CEO Doug McMillon said during an April 9 investment community meeting.
No matter how they’re accelerating shipping, executives at both companies say improved speeds are worth it, with shoppers showing a demonstrable interest in getting their orders sooner.
"When we promise faster delivery times, customers complete purchases at a meaningfully higher rate and shop with us more frequently," Amazon CEO Andy Jassy said in an April 10 letter to shareholders.
Walmart is using its expansive network of stores and new technology to boost its fast delivery reach throughout the U.S., executives said during the investment community meeting.
The company can currently reach 93% of U.S. households with same-day delivery and aims to increase that to 95% by the end of this year, said Dave Guggina, chief e-commerce officer of Walmart U.S. He noted the company's fast delivery reach covers top markets like Dallas as well as smaller rural communities like Elizabethtown, Pennsylvania, and Leonard, Texas.
"This growth was made possible by technology we deployed to more accurately predict how far our delivery service can reach," Guggina said.
The geospatial technology Guggina referred to, detailed in a news release last week, allows Walmart to adjust delivery coverage areas with improved accuracy. Instead of using ZIP codes to determine coverage boundaries, Walmart divides an area into hexagonal grids featuring real-time data like store capacity, driving time and customer demand. Twelve million more households have access to Walmart delivery as a result.
Walmart is also looking to make same-day deliveries faster to keep up with customer demand. For about one-third of store-fulfilled orders, shoppers are choosing to pay a fee to get it delivered in three hours or less, U.S. CEO John Furner said.
"We see this capability as a key advantage over even someone who can deliver 'Same Day.' Because 'Same Day' might be a 4-hour window later today," Furner said.
To build on that advantage, Walmart U.S. plans to test an "ultra-fast delivery" service that reaches customers in 30 minutes or less, Guggina said. The offering will be based on lessons learned from the company's international business — the majority of Walmart's e-commerce orders in China are delivered in less than an hour, and full basket size orders in Mexico's larger cities are being delivered as fast as 45 minutes.
Drone deliveries, another method to accelerate delivery, are already an option for eligible Walmart customers in the U.S. seeking deliveries in 30 minutes or less. The retailer has completed 120,000 drone deliveries so far, with some of that activity coming from its Dallas-Fort Worth test market, Furner said. The company plans to keep expanding its drone delivery reach, he added.
The number of same-day delivery facilities in Amazon's network grew by 60% in 2024, now serving more than 140 metro areas, Jassy said in a February earnings call. These facilities feature smaller footprints and a streamlined handling process that results in faster fulfillment versus traditional locations.
Amazon’s growing same-day delivery services are available in markets such as Atlanta and San Francisco, along with smaller communities like Cedar Rapids, Iowa.
"Although we’ve set speed records for two consecutive years, we’re still honing these innovations, and have others planned," Jassy said in the letter. "And, don’t forget Prime Air, our drones that will get items to customers inside an hour. We are not done improving speed."
Since November, Amazon's MK30 drones have been making deliveries in parts of Arizona and Texas. While drones come with their share of regulatory and cost-related hurdles, Jassy noted in the February earnings call that the technology is particularly helpful for customers ordering pharmacy prescriptions or "everyday essentials" like baby and pet food products.
Amazon is also investing in delivery service improvements for rural customers. The company has expanded same-day and overnight delivery to dozens of smaller U.S. cities and towns, with more to come, Jassy said in the letter to shareholders.
"This expansion will provide even faster Amazon delivery speeds for many millions of customers, particularly in less densely populated areas, enabling us to deliver over a billion packages each year to customers living in 13,000 zip codes spanning 1.2 million square miles," he said.
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