Walmart is starting next-day delivery to catch up with Amazon.
Walmart is expected to have higher costs since all items are not stocked in a fulfillment center closest to the customer. To reduce these inventory costs, the company will seek to stock items in regional fulfillment centers based on local market needs, and will impose a minimum dollar amount of $35 for orders.
The program rolled out to Phoenix and Las Vegas first, with Southern California next in the lineup.
This post is based on the CNN article, Walmart is rolling out next-day delivery. Look out, Amazon, by Nathaniel Meyersohn, May 14, 2019; and the YouTube videos, Walmart launches free next-day delivery by Fox Business, May 14, 2019; and How Walmart is taking on Amazon, by CNN Business, May 17, 2018. Image source: Shutterstock / sirtravelalot
1. What impact does next-day delivery speed have on smaller retailers?
Guidance: Students should recognize that customers are expecting next-day delivery as an order qualifier in the future. If delivery speed becomes the domain of the major retailers, what can a smaller retailer do to compete? This is a challenging question and students may decide that it is pointless to compete on delivery speed. If so, direct students to consider other means to create delivery speed such as partnerships, adding value by better flexibility, customization, quality, etc. Ask the students if delivery speed for food can be different than a snowboard. Does everything have to be next-day delivery?
2. How does the change to next-day delivery at Walmart change the supply chain strategy?
Guidance: Review both responsive and efficient supply chain strategies. Walmart has usually been presented as an example of an efficient supply chain strategy. Next-day delivery will require a more responsive approach perhaps. Or will it? The goal is to get students to consider how a supply chain designed for efficiency can or cannot support a more responsive approach.