Retail Pro: Walmart Remains 'In The Game' Against Amazon

Retail giant Walmart Inc WMT said Tuesday it will be able to offer 75 percent of the U.S. population a one-day delivery option by the end of the year. The free offer to consumers keeps Walmart "in the game" against online rival Amazon.com, Inc. AMZN, according to Jan Kniffen of J. Rogers Kniffen Worldwide.

What Happened

Walmart offered two-day free shipping options two years ago at no annual cost to consumers. In the coming days, consumers in certain cities including Phoenix and Las Vegas will be able to take advantage of one-day shipping.

One-day shipping will be available on orders of $35 or more and includes 220,000 items, including daily use products like diapers, laundry detergent and toys. Walmart says shipping these items for next-day delivery is cheaper than two-day shipping because it comes from a single fulfillment center located close to the customer.

Why It's Important

Walmart has been building momentum against Amazon as it now captures 10 cents of every dollar of new sales which is up from eight cents, Kniffen said during a CNBC interview Tuesday morning. By comparison, Amazon's share of new sales peaked at 35 cents for every dollar and has since moved lower to 14 cents.

Walmart has succeeded in narrowing the gap to win new sales and in the battle of one-day shipping Walmart holds one key advantage, he said. Amazon is spending "a lot" of money to build out its infrastructure to support next day delivery. By contrast, Walmart's existing infrastructure and expertise in e-commerce through Jet.com imply its shipping costs will be "low."

By the end of 2019, Walmart expects to expand the one-day shipping offer to include 40 of the top 50 major U.S. metro areas.

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