Walmart announced this week they purchased New York-based delivery company Parcel. Parcel’s delivery footprint is relatively small but the offer same day and next day delivery in the New York City market.
Parcel also build their business around providing perishable and non-perishable product delivery and technology-based routing and scheduling to meet customer’s delivery time preferences.
Delivery is increasingly more important for shoppers as they seek out retailers that can provide them with speed, flexibility, and reliability.
Walmart continues to experiment with third party logistics providers to test delivery options and even ran a few tests using their own associates.
However, the acquisition of Parcel gives the retail giant access to propitiatory logistics technology operating in one of the toughest delivery markets in the U.S.
Since its inception, Parcel has partnered with meal-kit companies, retail stores, and online merchants in the New York City area. The company has delivered over 1 million meals in just two years.
Walmart says they will continue to grow the delivery company by expanding the customer base of Parcel. But they are working to quickly integrate Parcel into their operations.
NEW YORK IMPORTANT WALMART GROWTH MARKET
While Walmart has been building more inroads around New York City metro area, the price and availability of real estate for Walmart stores is pretty limited.
Jet.com has been testing free delivery into New York City, but Walmart stores are mostly still on the peripheral of this important urban market.
“We plan to leverage Parcel for last-mile delivery to customers in New York City – including same-day delivery – for both general merchandise as well as fresh and frozen groceries from Walmart and Jet.”
Nate Faust, senior vice president, Walmart U.S. eCommerce Supply Chain
LOOKING BEYOND NEW YORK CITY
The growth of eCommerce and the demand by shoppers for even faster delivery means that large eCommerce companies have to continue to innovate to reduce the last mile problem.
Amazon also started out using lesser known regional parcel delivery services such as Lasership to expand it’s 2-day delivery offering. Over time, the company added delivery services to its distribution centers to complement standard parcel delivery services such as USPS, UPS, and FedEx.
If Walmart can expand and master the New York City market with Parcel, the success can be easily copied to other metro areas. It’s difficult to envision another delivery market as logistically challenging as New York City.
Target recently acquired Grand Junction, and it is becoming increasingly important for large retailers to control their own delivery network.
Since both Walmart and Amazon operate marketplaces for third-party sellers, this may even benefit small business sellers.
Simplifying warehousing and logistics for small businesses riding on the coattails of larger marketplaces may be the best solution for all parties.
What do you think about Walmart buying Parcel? Do you see this trend of large marketplaces becoming their own logistics providers as positive or negative? Let us know in the comments section below.