Whole Paycheck Tracker: Walmart, Amazon Avoid Most Shipping Issues; Lean On Fulfillment Networks

In order to get a share of the consumer’s whole paycheck, Amazon and Walmart will need to deliver the goods. During a week where that delivery system cracked under pressure for retailers like Gap, L.L.Bean, Macy’s and Nike, it’s worth taking a look at how the two biggest retailers in the world are fulfilling their commitment to the digital-first economy.

Both have the distinct advantage of having their own transportation and fulfillment networks. Because of them they have been able to avoid the big shocks to the system, such as the one that UPS delivered this week when it skipped out on deliveries for the aforementioned companies. But still it hasn’t absolved Amazon and Walmart from delivery issues during this first truly digital-first holiday season.

“Thinking about retailers and their supply chains for the 2020 holiday season, there is a naughty and nice list of challenges,” said Kris Bjorson, co-lead of the Retail and Industrial Task Force, JLL. “On the naughty list, expect indecisive consumer purchasing patterns, inevitably mishandled inventory and increased shipping charges and delays from transportation service providers. On the nice list, e-commerce builds on its 2020 growth pattern and there’s more curbside pick up, BOPIS and deliveries from physical stores to further evolve fulfillment obligations of bricks and mortars.”

That evolution has dominated the strategy at Walmart. Rather than take actions to remove pressure on its delivery network, it has expressed confidence in it by removing the minimum for grocery delivery. Now the company will offer free shipping on orders of any size for those who pay $98 a year for membership in Walmart+. This suspends Walmart’s previous $35 minimum requirement for free delivery.

The move comes about two months after the membership service’s launch and builds off the retailer’s pledge at the time to continue adding benefits to membership. The current list includes unlimited free grocery delivery and fuel discounts. According to Janey Whiteside, Walmart’s chief customer officer, removing the $35 threshold both allowed Walmart to deliver on meeting a frequent consumer request, and meet the needs of the moment where remote shopping is recommended for public health reasons.

“The pandemic hasn’t gone away,” Whiteside told the Associated Press. “And we felt it was the right time to do it.”

Whiteside’s comment implies that Walmart will deliver the groceries. But what about the rest of its eCommerce orders? A sweep of eCommerce delivery issues does not indicate any issues with Walmart delivery. That would indicate that the company’s investments in its pop-up distribution centers, local delivery efforts and its network have been working.

Amazon has also managed to avoid any substantial issues to its core business so far. But for its independent sellers, there have been issues. Bloomberg News reported that merchant chat rooms are abuzz with talk of delayed shipments, with more than a half-dozen sellers and consultants confirming such issues to the news service.

“The past couple of years, consumers grew accustomed to ordering products as late as Dec. 20 and having them delivered before Christmas. That is not likely to happen this year,” merchant Molson Hart, who sells stuffed animals and games via Amazon, told Bloomberg.

Hart said that about 70 percent of his inventory is being delayed by as much as a week. Other merchants told Bloomberg similar stories, saying that problems began over the weekend and that they fear issues will continue through the busy days of Black Friday, Small Business Saturday and Cyber Monday.

One seller said Amazon seemed to be prioritizing high-volume items for its own delivery system and requiring merchants to handle their own order fulfillment on less popular items. That’s similar to a policy that Amazon publicly announced early in the pandemic, when the online giant suddenly faced a flood of orders from consumers stuck at home by lockdown orders.

However, Bloomberg said Amazon hasn’t issued any similar warnings or explanations this time around, and a company spokesman told the news service that anecdotal merchant reports don’t mean the eCommerce giant is facing a systemic problem.

“We have not changed how offers are presented to customers to shift volume from Amazon fulfillment to seller fulfillment,” the spokesman said. “As always, product offers continue to compete to be the featured offer based on a variety of factors, including lowest price, availability, fastest delivery speed and best seller performance.”