Walmart blows Amazon out of the water with its own free, next-day delivery

By Hayley Peterson of Business Insider.

"Walmart is undercutting Amazon's newest Prime-member perk and launching free, next-day shipping on hundreds of thousands of products.

Walmart's next-day service, which applies to orders costing at least $35, is rolling out Tuesday in Phoenix and Las Vegas, Walmart said. It will be available to 75% of US shoppers by the end of the year and continue to expand next year, Walmart ecommerce CEO Marc Lore told Business Insider.

Unlike Amazon Prime, which costs $119 annually, Walmart's next-day shipping requires no membership fees. And it will be cheaper for Walmart to execute than two-day shipping, because each order will be fulfilled from a single fulfilment center, Lore said. Walmart's two-day orders, by comparison, can be filled from multiple facilities and in multiple boxes.

"Shipping costs will definitely go down," Lore said in a phone interview.

Walmart's rollout of next-day delivery comes less than three weeks after Amazon revealed plans to cut its Prime program's default shipping speed to one day.

Lore said the timing of the companies' announcements was mere coincidence.

"We had planned to make this announcement on this day many months ago," he said, adding that Walmart started investing in the infrastructure for next-day shipping more than two years ago.

Walmart hinted last month that a next-day shipping rollout was coming soon. Shortly after Amazon announced it would be speeding up Prime shipping, Walmart tweeted: "One-day free shipping...without a membership fee. Now THAT would be groundbreaking. Stay tuned."

Walmart's next-day shipping offer will initially be available only on a selection of up to 220,000 items, which will vary regionally based on customers' ordering habits.

Lore said the assortment will grow over time.

"We will continue to add products for next-day shipping," he said.

The company also plans to make "aggressive investments" in automation and boxing technology at its fulfillment centers to further drive down the costs of next-day shipping, he said.

Next-day shipping should help Walmart gain market share and attract new customers who haven't previously ordered from Walmart.com, according to Sucharita Kudali, vice president at the market research firm Forrester.

It will also ramp up pressure on Amazon to execute well on its own promise of one-day shipping, she said.

"There has been this thesis for the last few years that Amazon is untouchable - that it's this runaway train of success and nobody can catch up," she said. "I think what we're seeing is: it's not over in retail. There's still a ton of competition, and ultimately the customer wins.""