As of early October 2012, Wal-Mart launched a same-day delivery service for orders placed online. Wal-Mart began testing the service in Philadelphia and Virgin, but plans to continue adding cities through the holiday season. The company announced that the service will cost $10 regardless of order size and orders will be shipped directly from Wal-Mart stores. The orders must be placed before noon and will be delivered within a four-hour time period via United Parcel Services. Wal-Mart is only offering a select number of products to be shipped using the same-day delivery service.
Wal-Mart launched this initiative in order to better compete with Amazon’s highly successful delivery system. Few offline retailers offer same-day delivery services; Wal-Mart has numerous retail locations to make this task feasible. Wal-Mart will be shipping orders directly from stores whereas Amazon uses warehouses and distribution centers. It is believed that Wal-Mart’s attempt to ship from retail outlets will be three to four times as costly as shipping from a warehouse or distribution center. Amazon is also offering lower prices and currently operating the same-day delivery system in more cities compared to Wal-Mart.
In an attempt to reach the millions of people who do not use credit cards or do not feel comfortable sharing financial information online, Wal-Mart is allowing customers to order merchandise online and pay at a retail store. Executives at Wal-Mart hope this advantage will increase same-day delivery demand and take customers away from using Amazon’s website. Wal-Mart invested in offering same-day delivery in attempt to turn its physical retail outlets into a competitive advantage. They have costs that many online retailers do not have, such as real estate, inventory, and staff expenses. Wal-Mart hopes to boost sales and improve profitability through the unique delivery system that uses retail stores instead of warehouses or distribution centers.
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