The big guy finally started to play his cards. Walmart announced Project Titan, their online grocery shopping effort at the beginning of the month.It is rumored to involve grocery delivery in the San Jose area.
The press is covering the project with some enthusiasm mentioning WebVan, Home-grocer and other failures while at the same time offering some positives by looking at Walmart’s own ASDA online grocery delivery experience in Britain.
Online grocery shopping, and other online grocery activities (promotions, other marketing efforts) have been successful in the U.S. as well as in Britain, Sweden and other areas.In the U.S. online ordering with “drive by pickup” is the preferred method in all but the most densely populated urban areas. Walmart has no small amount of experience in this model, albeit with non-grocery items having been the focus over the last few years as they have continued to tinker with the service. Chances seem very high that they will offer this pick-up option in addition to delivery on grocery. With their current store based expansion plan including smaller formats (smaller super stores, more supermarkets and their new convenience effort) they will have more touch points convenient for consumers on their way home.
The addition of the non-grocery assortment to the offering online for the shopper gives Titan a real advantage on the margin game, if they can convince the shopper to toss in a pack of socks or a can opener. That and the CPG ad revenue will be substantial through this new channel.
So far traditional grocers have not reacted much to current (Amazon, Amazon Fresh, Sears-Kmart, Netgrocer, Alice, Fresh Direct etc.) businesses trying to move into the grocery space. A few physical grocers offer full online shopping services include Safeway in select markets and a number of regional and independent players as well as Peapod through a number of Ahold banners.The number of stores offering is limited, under 600 in total out of a universe of 30,000 supermarkets. The size of the business is relatively small based on dollars but is growing much more rapidly than the store based business, as has been the case in every other industry where online is a viable channel.
So, why aren’t more traditional moving more aggressively to protect their turf? This is most assuredly NOT your father’s WebVan.