Anybody can now offer free 2-day shipping on Walmart.com — and Amazon should be worried (WMT, AMZN)
- Walmart's partnership with Deliverr is now open to any merchant who desires to opt in to it.
- It offers a service that mimic Amazon's Fulfillment by Amazon program, but for selling on Walmart.com.
- This could open the floodgates for two-day shipping from Walmart, greatly expanding the number of items available on the site.
- That copies a similar strategy Amazon has employed to great success. Walmart's move makes Amazon's current shipping advantage less unique.
In the battle for online customers, Walmart may have just made a major breakthrough — but it didn't do it on its own.
Since 2018, Walmart has partnered with Deliverr on a program to help third-party merchants sell items with Walmart's green two-day shipping tag. Starting this week, any merchant can opt in to Deliverr's services and get that tag on the merchandise they sell on Walmart.com.
Deliverr uses a network of leased space in warehouses around the country to allow other marketplaces, including Walmart, Shopify, and eBay, to mimic the services of Amazon, according to Deliverr cofounder Michael Krakaris. Deliverr takes a set fee off the top and handles both storage and fulfillment, just like Fulfillment by Amazon does for Amazon sellers.
Since not all merchants are equipped to handle the grueling demands of two-day shipping, especially without massive warehouses spread throughout the country like Amazon has, Deliverr can step in and offer it on a price-per-unit basis.
Walmart's program with Deliverr has expanded since it was announced in October 2018. Previously, only items sold directly by Walmart were eligible for the green two-day shipping tag. It's now also available to other merchants or third parties that partner with Walmart and can prove they can handle two-day shipping.
That green tag is important, as it functions the same way that Amazon's Prime tag does, indicating to sellers that shipping will be free, fast, and painless, as long as the order is $35 or above.
Making it easier to list an item with the tag on Walmart.com, albeit through a third-party company, will likely result in a huge uptick in the number of items sold on Walmart.com with a free-two-day-shipping badge.
Read more: Amazon will soon lose the biggest reason to pay for Prime
That's important, as Walmart still lags in the number of items it makes available for two-day shipping online. It does offer it on millions of items, but not quite the 100 million items that Amazon boasts are Prime-eligible.
Amazon's Fulfillment by Amazon program has been a runaway success, leading to sales of third-party merchandise overtaking those of its direct selling in recent years. But if Deliverr and Walmart succeed in getting more items on Walmart.com, the distinction — and the reason to stay with Prime — may melt away.
"For the other marketplaces, if they can enable the same amount of selection for free two-day shipping that Amazon has on Prime, why would users stay on Prime?" Krakaris said in a recent interview with Business Insider.
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