Walmart, America’s biggest retailer, has signed up Home Depot, the nation’s largest home improvement firm in an e-commerce tie-up that puts last mile fulfilment to the fore - and also validates a gamble launched by the former earlier this year.
Home Depot will use Walmart’s GoLocal service to offer same-day or next-day delivery on a variety of products to a number of markets in the coming weeks with the ultimate objective of providing the delivery service to 90% of the US population. (Walmart’s famous boast is that 90% of people in the US live within 10 miles of one of its outlets.)
GoLocal is a new as-a-Service offering from Walmart that was announced back in August. It’s intended to build on the retailer’s own expertise in delivering goods to customers and its vast physical retail footprint around the US. At the time of launch, Tom Ward, Senior Vice President, last mile, Walmart US, pitched the service thus:
We’ve worked hard to develop a reliable last mile delivery program for our customers. Now, we’re pleased to be able to use these capabilities to serve another set of customers, local merchants. Be it delivering goods from a local bakery to auto supplies from a national retailer, we’ve designed Walmart GoLocal to be customizable for merchants of all sizes and categories so they can focus on doing what they do best, leaving delivery speed and efficiency to us.
Walmart points to its own experience of launching and scaling delivery and Express delivery for its customers on 160,000+ items from more than 3,000 stores over a three year period. It can now reach nearly 70% of the US population via conventional delivery vehicles. drones, autonomous vehicles and market fulfillment centers.
It had been assumed when the service was announced that its primary focus would be smaller local retailers with limited e-commerce capabilities. The fact that the first named client is a massive market-leading nationwide retailer suggests the potential of this new business for Walmart could be considerably larger than first imagined.
Home Depot deliveries will start at select stores in New Mexico, Arkansas and Texas, then expand out to other territories. Stephanie Smith, Senior Vice President of supply chain for The Home Depot, commented:
The Home Depot is continuously working to give customers the most convenient shopping experience in home improvement, and that includes providing a wide range of fast and reliable delivery options. This partnership brings us even closer to our goal of offering same-day or next-day delivery to 90% of the US population.
As to what you can have delivered via this new tie-up, it's centered on products such as tools, fasteners, paint and other supplies, essentially anything that’s going to fit easily in a car. The delivery option can be selected at online checkout for customers making e-commerce purchases.
This is the latest development in Home Depot’s high profile omni-channel transformation program. The retailer, in common with other DIY firms, got a welcome boost from locked down customers using their effective house arrest to get to grips with long-postponed home improvement projects, with e-commerce sales up 86% year-on-year in fiscal 2020.
More than half of online orders are currently fulfilled through stores with 1.2 billion cubic feet of products being shifted through the firm's existing delivery network. Given the current global supply chain crisis, the Walmart engagement provides some useful ballast for the firm’s delivery ambitions.
CEO Craig Menear hinted at this development at the recent Goldman Sachs Annual Global Retailing Conference when he talked about expanding the firm’s supply chain capabilities:
At the end of the day, when we have the supply chain build-out, we'll be in a position to be able to serve our customers with any type of product that we sell whether that's big and bulky, or parcel delivery same day, next day capable for 90% of the US population.
The clue’s there in that 90%!
But in reality this is further indication of Home Depot’s commitment to layering in digital transformation to its operating model, with delivery and last mile fulfilment now recognized as a critical competitive differentiator for e-commerce aspirants. As Menear puts it:
We really believe that, the customers are blending the physical and digital worlds to complete their projects. And we want to make that as seamless as possible…We believe that we still have opportunity through both process improvement and technology to continue to drive efficiency in how we operate our stores, and how we do that for the customer when they choose to blend the physical and digital worlds together.
He added that Home Depot has particular insight into supply chain pressures:
At the highest level over the years, Home Depot has learned a ton from the work that we do on supporting communities in storm environments. Those are environments where you're in constrained availability compared to demand. You've got to be able to be very creative about how you move goods and work with your suppliers and drive all the components of the supply chain to fulfill that demand.
I think we've learned a ton from that scenario over the years. And our teams are very creative in terms of doing whatever it takes to try to make sure we take care of the customer and serve the demand.
A fantastic win for Walmart and one that changes the perception of who might be the target audience for this new service, as well as providing a timely reminder of the importance of that last mile in the increasingly febrile e-commerce sector. This is going to be worth keeping a close eye on as it rolls out.