Wal-Mart to Amazon: BRING IT

Punch line: Wal-Mart is launching a new same-day delivery service to compete against Amazon.com this holiday season.  Wal-Mart boasts a huge network of stores to ship product from, but Amazon has effective operational efficiencies and loyal customers.  This season, who will win the holiday war?

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Excerpted from WSJ’s “Wal-Mart Delivery Service Says to Amazon: “Bring It.”

In its latest bid to take on Internet powerhouse Amazon.com this holiday season, Wal-Mart is promising same-day delivery in some cities for orders placed online.  The retailer began testing the new service in select cities last week and says it will cost $10 regardless of the size of the order.

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Called Wal-Mart To Go, the products will be shipped from the company’s stores, not from a warehouse or distribution center.   Over the past several years, Wal-Mart has launched several attacks on its online rival, including a price war over best-selling books three years ago.

This time, Wal-Mart is betting that its network of thousands of stores … can help it compete head to head with Amazon, which has increasingly stressed fast, free or low-cost deliveries.

But shipping from stores, rather than from warehouses as Amazon does, is expensive, analysts said.  It can be three to four times the cost for the retailer to pick items and pack them from a store versus having a really efficient, automated process back in a distribution center.

Wal-Mart has been ramping up its e-commerce business, which employs 1,000 workers in San Bruno, Calif.  The retail giant has acquired nearly a dozen start-ups to help broaden its online presence and developed @Walmart Labs, its Silicon Valley tech shop that has revamped the walmart.com website and mobile applications to make them more competitive with Amazon and other online retailers.

Wal-Mart also has been trying to compete with Amazon’s prices inside its stores. In some, it has quietly begun matching the online retailer’s prices when customers ask, a practice historically done only against local brick-and-mortar competitors.

Wal-Mart also has been trying to use its stores to tap into millions of shoppers who either don’t have credit or debit cards or don’t feel comfortable disclosing their personal financial information online.  In April, the retailer began a program that allows customers to order merchandise online and pay for it at a store with cash.

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