Amazon
The battle between the world’s two biggest retailers is heating up.
Amazon said Tuesday that it is adding more than 4,000 “smaller” communities to its coverage area for same-day and next-day delivery service.
The e-commerce giant said it has begun stocking more everyday essential items at delivery stations to ensure they’re available within hours of a customer placing an order.
“Everybody loves fast delivery,” Worldwide Amazon Stores CEO Doug Herrington said in a statement.
“Whether you live in Monmouth, Iowa, or in downtown Los Angeles,” he said, shoppers can soon get the “items you need to keep your household running every day, delivered the same or next day.”
The push pits Amazon against Walmart’s US dominance of rural markets. Walmart’s growing e-commerce operation is supported by its fleet of more than 4,600 stores that are within 10 miles of 90% of the US population.
To use Amazon’s example of Monmouth, while the 129 people who live there don’t have a Walmart in town, they are squarely between two supercenters, about 20 minutes to the east and west. There’s even a third store about 40 minutes away to the south.
Walmart has spent much of the past 60 years building a commanding retail presence in the kinds of small towns Amazon is now targeting, not to mention the sprawling logistics network to support it.
America’s cities and suburbs are still the powerhouse of consumer spending, but big retailers like these two can’t afford to ignore potential customers in farther-flung locales.
A report released Tuesday from Morgan Stanley analysts estimates that rural households account for about one out of every five dollars spent on personal consumption in the US. That amounts to $1 trillion a year, which Amazon is now looking to capture.
Big as Walmart and Amazon are, the companies have so far played to different strengths: Walmart is America’s grocery king, while Amazon can bring a head-spinningly large assortment of products to your doorstep.
Now, as Walmart enlists actor Walton Goggins to tell shoppers they can buy almost anything — including a sauna — on the company’s growing marketplace, Amazon is leveraging AI to ensure it has enough coffee pods, crackers, paper towels, and diapers available to meet same-day orders. In short, each rival is going up against the other’s strength.
Still, groceries appear to be the main driver of Amazon and Walmart’s speedy delivery pushes (the sauna can arrive whenever, but the missing ingredients for tonight’s dinner recipe need to arrive as soon as possible). Walmart executives have said they view ultra-fast delivery as a path to growing customer loyalty.
The Morgan Stanley report found that nearly three-quarters of urban shoppers ordered groceries online in the last three months, compared with less than half of rural shoppers.
An even larger share of rural shoppers said they have never ordered groceries online. That suggests there is considerable room out in the country for Amazon and Walmart to attract new same-day delivery customers.
The fight over the coming months will likely revolve around which company is better at playing the other’s game.
The post Amazon is taking on Walmart’s rural dominance with its latest delivery push appeared first on Business Insider.
