Dive Brief:

• Walmart on Thursday announced a two-hour delivery service called Express Delivery, rivaling Amazon’s Prime Now.
• The retailer “accelerated the development of the service in the wake of the coronavirus pandemic,” according to a press release. It piloted the service at 100 stores in mid-April and will expand to nearly 1,000 stores in early May, followed by 2,000 stores in the weeks after.
• Walmart’s team of personal shoppers will pick orders in store, and the retailer will utilize its existing delivery partners for last-mile delivery.

Dive Insight:

Retailers continue to raise the bar on speed in what Charlie O’Shea, senior retail analyst at Moody’s​, described as an “arms race.”

Amazon is known for upping the ante, with its moves to one-day delivery for Prime and two-hour delivery through Amazon Prime Now. “When you read the tea leaves over what’s been happening with Walmart over the last couple of years, they were going to head into a rapid same-day delivery concept,” O’Shea told sister publication Supply Chain Dive.

Walmart is leaning on its existing stores and logistics network to execute its Express Delivery service. The retailer has a team of 74,000 personal shoppers who pick items from store inventory. A portion (Walmart did not specify how many) were hired specifically for Express Delivery.

Fulfilling or shipping from store has gained popularity among big-box retailers. “Stores are tremendous assets if used in the right way,” O’Shea said.

Target executives on numerous earnings calls and investor presentations have touted the benefits of a store-centric e-commerce fulfillment model, for its efficiency and cost savings. And during the pandemic with nonessential businesses still closed in many states, retailers have turned to ship-from-store services as a way to move inventory trapped in physical locations.

Walmart’s network of nearly 5,400 stores in the U.S. gives it the ability to lean on physical locations for speedy delivery to consumers — a “built-in advantage” it has over Amazon and pure-play online retailers without a brick-and-mortar presence, according to O’Shea.

The coronavirus pandemic has stressed last-mile delivery capacity throughout the U.S., as there’s a “limited universe of delivery partners,” O’Shea said. But he added, there’s no reason why Walmart’s Express Delivery service won’t succeed, as the retailer has the store base and existing delivery partners to execute it.