(Reuters) – the Walmart Inc and logistics company Deliv pulled the plug on a key on the same day grocery-shopping service, cooperation, dealing with a decline in the retailer’s race against the rival Amazon.com Inc to deliver groceries to customers at home.
FILE PHOTO: Walmart logo is seen outside one of the shops in Chicago, Illinois, usa, 20 November 2018. REUTERS/Kamil Krzaczynski/File Photo
The world’s largest retailer, began the strengthening of the partnerships with third-party courier companies to reach consumers in 100 cities in the U.S. last year, after failing to use Uber and Lyft to deliver messages, and wrestling in an attempt to make use of its own employees to deliver the goods.
Deliv, that was one of Walmart’s earliest partners with pilot programs in Miami and San Jose, and served the retailer with a 90-day termination notice, and the two companies stopped working with each other in the end of January, according to two people familiar with the situation.
Walmart confirmed the previously unreported decision, and said that it still partners with seven delivery companies, including DoorDash and Postmates, four of which it signed in January.
People who are familiar with the Walmart partnership with Deliv said the Deliv drivers had to wait 40 minutes or more to collect groceries orders when they came in the store. A reason for that, she said, is because Walmart gives priority to customers about drivers, during the regular hours, which complicated the partnership.
The store operations at Walmart “were a big problem,” said one of the people with direct knowledge of the matter, adding the retailer could not process online shopping orders fast enough.”
Deliv declined to comment. Walmart spokeswoman Molly Blakeman told Reuters that the retailer and Deliv mutually decided to end the partnership. “As with any pilot, the intent is to learn. And we eventually come to the conclusion, with Deliv that while their platform is a good delivery option, it was not the best fit for our program at this time.”
Blakeman said the same day grocery-shopping service is currently available in more than 800 of the more than 5,000 U.S. stores and warehouse clubs, and the retailer plans to add 800 more this year.
Deliv has scheduled same-day deliveries by performance drivers, a model that works well with the faster processing of the order and a better ability to predict demand and robust volumes. Walmart is now working mostly with restaurant delivery companies that deliver an order and when it is generated, one of the sources said.
Both sources said the volumes were low in many markets, and a source said orders had to be delivered over great distances, resulting in both Deliv and Walmart to lose money.
“As the partnership with Deliv, was affected, was the hope that the demand will be stronger than it is now,” says one of the sources said.
Deliv works in 1,400 cities in the U.S., the emergence of networks of local freelance drivers to deliver packages the same day for a fee for a number of retailers, Home Depot Inc, to Kohl’s Corp.
In October, $40 million in a new round of financing from investors, including the Alphabet Inc, Google and United Parcel Service. In December, it signed 20 new US retailers, including Nike Inc. and Nordstrom.
Deliv to be able to process and deliver thousands of orders in an hour. Walmart in San Jose was sometimes generating only a hundred orders per week, and there were problems with the processing of that volume through the stores, one of the sources said. Walmart is working on a solution for the problems in the stores to process orders more quickly, the source added.
Blakeman said that there were no problems with the volume in the market.
The sources also told Reuters that Walmart has entered into a separate grocery delivery test in 2017, which together with the smart security company August Home and Deliv for keyless-items to shoppers houses, to deliver messages directly to the refrigerator.
Reporting by Nandita Bose in Washington; Editing by Vanessa O’connell and Edward Tobin