Wed, Feb 13, 2019 - Page 10 News List

Walmart, Deliv end grocery partnership

Reuters

A woman shops for a turkey at a Walmart store in Chicago on Nov. 20 last year.

Photo: Reuters

Walmart Inc and logistics firm Deliv pulled the plug on a key same-day grocery delivery partnership, dealing a setback in the retailer’s race against rival Amazon.com Inc to deliver groceries to customers’ homes.

The world’s largest retailer last year began bolstering its partnerships with third-party courier firms to reach consumers in 100 US cities, after failing to use Uber Technologies Inc and Lyft Inc to deliver groceries, and struggling in its attempt to use its own employees to deliver goods.

Deliv, which was one of Walmart’s earliest partners with pilot programs in Miami, Florida and San Jose, California, served the retailer with a 90-day termination notice, and the two companies stopped working with each other late last month, according to two people familiar with the situation.

Walmart confirmed the previously unreported decision, and said it still partners with seven delivery firms, including DoorDash Inc and Postmates, four of which it signed up last month.

People familiar with the Walmart partnership with Deliv said that Deliv drivers had to frequently wait 40 minutes or more to collect grocery orders when they showed up at the store.

One reason for that, they said, is because Walmart gives a priority to customers over delivery drivers during regular hours, which complicated the partnership.

The store operations at Walmart “were a huge problem,” said one of the people with direct knowledge of the matter, adding that the retailer could not “process online grocery orders fast enough.”

Deliv declined to comment.

Walmart spokeswoman Molly Blakeman told Reuters that the retailer and Deliv mutually decided to end the partnership.

However, Blakeman said that same-day grocery delivery is available in 800 of its more than 5,000 US stores and warehouse clubs, and it plans to add 800 more this year.

Deliv offers scheduled same-day deliveries through gig drivers, a model which can work well with faster order processing and a better ability to predict demand and robust volumes.

Walmart is working mostly with restaurant delivery firms that deliver an order as and when it is generated, one of the sources said.

Both sources said order volumes were low in many markets, and one source said orders had to be delivered over large distances, resulting in both Deliv and Walmart losing money.

“When the partnership with Deliv was struck, the hope was that demand will be stronger than it is now,” one of the sources said.

Deliv operates in 1,400 US cities, tapping into networks of local freelance drivers to deliver packages same-day for a fee for a range of retailers, from Home Depot Inc to Kohl’s Corp.

Deliv can process and deliver thousands of orders in an hour.

Walmart in San Jose was sometimes generating only a hundred orders a week, and there were problems processing that volume through stores, one of the sources said.

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