Wal-Mart Stores Inc. has enlisted ride-hailing companies Uber and Lyft to help it battle rising grocery competitor Amazon.com Inc.
The two San Francisco firms will partner with Wal-Mart to get last-mile grocery deliveries to customers as part of a test program starting in two weeks. Uber will deliver for Wal-Mart in Phoenix, while Lyft will do the same in Denver. The two firms generally compete against each other for business in both cities.
Customers can order certain goods online and select a window for same-day or scheduled delivery. Then Wal-Mart employees will summon a driver from a ride-hailing firm to pick up the shipment and take it to the customer, who will be notified the delivery is on its way.
Wal-Mart will charge the company's standard priority delivery fees of $7 to $10. Customers will not pay the drivers.
Company Chief Executive Doug McMillon is expected to give more details at Wal-Mart's shareholders meeting Friday.
"We'll start small and let our customers guide us," Wal-Mart Executive Vice President Michael Bender said in a blog post. "But testing new things like last-mile delivery allows us to better evaluate the various ways we can best serve our customers how, when and where they need us."
In March, Sam's Club started a similar pilot program with same-day delivery company Deliv to take merchandise to business members in Miami.
Amazon's same-day delivery for Prime members now reaches customers in 27 metropolitan areas.
To combat this, Wal-Mart has been expanding its online grocery pickup program, which is offered in 40 cities, and it also has a home grocery delivery service in San Jose and Denver.
"This trial is meant to attempt to slow erosion of one of their largest businesses, their grocery business, by basically attempting to offset the perceived advantage ... of having on-demand delivery," said Stephen Beck, founder and managing partner of cg42, a competitive strategy firm. "Clearly this is a response to what Amazon's doing."
For Uber and Lyft, the partnership is another way to test the parcel delivery market — a sector apparently compelling enough for the two bitter rivals to find a common partner. Both companies have dabbled in package delivery before, but the Wal-Mart partnership could help them determine whether such business provides a sustainable revenue stream, Beck said.
The test program, along with the pilot service with Deliv, also could allow Wal-Mart to evaluate these companies for potential longer-term partnerships, or to expand the retailer's customer base, said Jennifer Polk, research director at Gartner.
Uber and Lyft generally operate in more urban areas, while Wal-Mart stores are located in fewer metropolitan areas, meaning a delivery service through the ride-sharing companies could capture higher-income customers who are willing to pay for convenience, she said.
MORE BUSINESS NEWS