Walmart has acquired Parcel, a same-day and last-mile delivery company based in New York, the retail giant announced in a press release and blog post on Tuesday. The acquisition price was not disclosed, though Walmart noted the deal was smaller than its previous acquisitions this year, which include Modcloth, Moosejaw and Bonobos.
The retailer plans to use the acquisition to beef up its last-mile delivery cababilities in New York City — including same-day delivery — for both general merchandise as well as fresh and frozen groceries from Walmart and Jet, according to the blog post.
Parcel uses routing algorithms, leased vehicles and an employee-based workforce to sort, load and deliver packages to customers on the same day, overnight and in scheduled two-hour windows, according to the press release.
Just days after insisting that its New York City same-day deliveries for both Walmart and Jet orders were merely a test, the retail giant with this acquisition appears to be solidifying that effort.
Nate Faust, senior vice president, Walmart U.S. e-commerce supply chain, pointed to New York as an ideal location for sales growth. "New York City is the top market for both Jet and Walmart.com, and because of the density of the area — along with the proximity of our fulfillment centers — it’s the perfect place for high-impact innovation," Faust wrote in a blog post.
This New York-centric acquisition has the fingerprints of Marc Lore, Walmart U.S. e-commerce chief and Jet founder, all over it. Although he has touted in-store pickup services as the most efficient and cost-effective way to accomplish last-mile delivery across Walmart's store base nationwide, Lore clearly aims to compete with Amazon and other retailers' delivery efforts in larger cities.
Walmart is testing grocery delivery in areas outside of New York, too, Ravi Jariwala, senior director of public relations at Walmart.com, told Retail Dive last week. Those tests are in a few of the areas where the retail giant already offers free store pickup of online orders, Jariwala noted. In some areas Walmart employs its own delivery drivers, in others the retailer is working with Uber.
The retailer last week also announced that it's partnering with Deliv and "smart locks" company August Home to test a new service for Silicon Valley customers delivering food products inside customers' homes and refrigerators even when they are not home.
Lore’s e-commerce ambitions — he is increasingly seen as Walmart’s answer to Amazon founder Jeff Bezos — have boosted Walmart’s e-commerce sales, in part thanks to Walmart's recent acquisition spree and purchase of Jet last year. Wall Street so far has loved the changes, but profitability could become an issue for Walmart, especially if it continues to pursue fulfillment services as expensive as free same-day delivery.
"The markets will applaud a sustained pattern of increasing traffic and sales across all platforms, which they are delivering," retail analyst Nick Egelanian, president of retail development consultants SiteWorks International, told Retail Dive in an email. "My long term outlook for profitability in their commerce operation remains cloudy though."