(Bloomberg) -- Walmart Inc. could easily match Amazon.com Inc.’s one-day delivery gambit, according to an analyst who previously worked at the world’s largest retailer.
“One day shipping is neither shocking nor difficult for retailers at scale,” Brandon Fletcher, an analyst at Sanford Bernstein, said in a note Friday.
Fletcher, who previously worked in Walmart’s strategy and operations departments, said the retailer’s existing network of 156 distribution centers, combined with the fact that much of the U.S. population is concentrated in urban areas, means that it wouldn’t require much investment to build out a one-day service. He cited previous research conducted by consultants A.T. Kearney -- where Fletcher also briefly worked a decade ago -- that showed Walmart could get to one-day shipping with only eight additional distribution facilities.
Amazon’s decision to spend $800 million this quarter to reduce delivery times for its Prime customers to one day from two sent big retailers’ shares plunging Friday. Target Corp. had its biggest intraday loss since November, while Walmart declined the most intraday since December.
Walmart has offered free two-day shipping on orders of $35 or more since early 2017, helping it keep pace with Amazon, which accounts for about half of all e-commerce spending in the U.S. The $35 threshold has been adopted by other retailers, as well, in order to offset the delivery costs. Some retailers, like Target, temporarily ditched the requirement during the holiday period in a bid to lure shoppers.
Retail transactions with free shipping increased about 13 percent in North America last year, and rose 8 percent through April 15 of this year, according to DynamicAction, an analytics firm.
To contact the reporter on this story: Matthew Boyle in New York at [email protected] To contact the editors responsible for this story: Crayton Harrison at [email protected] Jonathan Roeder, Craig Giammona
© 2019 Bloomberg L.P