American Shoppers Are Paying up for Faster Delivery | Invesloan.com

American shoppers appear to be singing the iconic words of the rock group Queen: “I want it all, I want it all, and I want it now.”

Walmart shoppers in particular seem to have an insatiable appetite for getting lots of stuff delivered — and fast.

“Speed of delivery is important to customers, and we’re continuing to get faster,” Walmart CFO John David Rainey said Thursday on the retail giant’s second-quarter earnings call.

Rainey said that roughly a third of the company’s ship-from-store orders were fulfilled in three hours or less — many of which required either an additional rush fee or a $98-a-year membership with Walmart Plus.

A fifth of those orders reached customers in 30 minutes or less, Rainey said. That works out to one in fifteen orders fulfilled from the store arriving in less than half an hour.

That kind of speed is key to competing with rivals. Walmart’s push to speed up delivery comes as competitors Amazon and Tractor Supply Co. have laid out ambitious expansion plans this year for the size and speed of their fulfillment networks, especially in more rural markets. Morgan Stanley analysts estimate that rural households account for about one out of every five dollars spent on personal consumption in the US.

But regardless of whether they live in cities, suburbs, or rural areas, American shoppers seem to be getting increasingly impatient — especially when it comes to everyday essentials.

To that end, Amazon also said last week that it now offers fresh grocery delivery in more than 1,000 cities and plans to double that by the end of the year. Its same-day delivery service is free for Prime members on orders over $25 and available to non-members for $12.99.

Both of Amazon’s initiatives (rural expansion and faster grocery delivery) target Walmart’s bread and butter business. Walmart CEO Doug McMillon said he isn’t surprised — and the competition is pushing the company to get stronger.

“Convenience has been driving our business for a while now, and I think that’ll continue,” McMillon said on Thursday’s earnings call. “We stay focused on what’s happening with the customer.”

Jefferies retail analyst Corey Tarlowe told Business Insider that Amazon still has a long road ahead to close the gap with Walmart.

“We all know that Amazon can get you stuff fast, but Walmart can deliver to 95% of the US in under three hours,” he said.

Speeding delivery, from milk to chicken feed

Americans don’t just want their milk and eggs to arrive fast. They want their livestock and chicken feed delivered to their doorsteps, too.

Rural lifestyle retailer Tractor Supply Co. reported strong growth of its in-house fulfillment service, which can handle everything from chicken feed to fencing to gun safes with more speed and finesse than some of its existing delivery partners.

“In markets where Final Mile is active, we’re seeing an average order size of nearly $400, which is a multiple of our average basket. Our largest order has been valued at more than $40,000,” the company’s supply chain chief, Colin Yankee, told investors on an earnings call last month.

Yankee said the service earns higher customer satisfaction scores, a significantly lower return rate, and stronger engagement than the company’s other delivery options.

Consumers also continue to hire private taxis for their burritos. Uber’s delivery revenue was up 20% last quarter. And Instacart reported that one in four orders that paid an expedited Priority fee last quarter were completed in 30 minutes or less. The company also said it rolled out new Priority options for Costco and Kroger.

Behind the scenes, the companies in this delivery race are tapping into huge budgets for AI, robotics, and other supply chain wizardry in the effort to eke out a bit more speed and efficiency. Some are even expanding their fleet of drones.

So far, US shoppers have shown themselves willing to pay for the option of having their groceries, merchandise, and more delivered right to their door in minutes.