Monday, October 29, 2007

Wal-Mart to Start Grocery Delivery

After witnessing the success Amazon (AMZN) has had to date with its grocery delivery program, Wal-Mart(WMT) is following that model and entering the space.

Amazon, which currently undercuts local supermarket prices by some 30% at their online site ships bulk order of non-perishable items. Wal-Mart, whose service will be almost identical to Amazon and offer items like Perrier water, trade free coffee, Campbell’s(CPB) V-8 juice, Kellogg’s (K) snack bars, dried fruit and popcorn, as well other non-food items such as dish and body soap, will ship the items from their Sam's Club division at prices 5% lower than those currently available at Amazon.

While amazon currently does not break out results of this division currently, the fact that they are testing expansion of the service to include a full line of grocery items in Seattle (HQ) would lead one to believe that it has been a success up to this point.

This is a good move for Wal-Mart as it is another growth avenue that will require minimal capital to enact. The items will be shipped by the post office or UPS (UPS) so no fleet of truck or delivery staff it needed until such a time they decide to do fresh foods (if ever). If nothing else, it is another reason for people to visit the Wal-Mart website and research has shown once there, people will buy something, even if it is not what they went there for in the first place.

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