Can Walmart Take a Bite Out of DoorDash and Uber Eats? | Fast Five Shorts

Walmart is expanding restaurant delivery beyond just the Subway locations inside its own stores, with SVP of Digital Fulfillment Transformation Greg Cathy signaling that the retailer also wants to bring meals from restaurants near Walmart stores into the Walmart app.

According to a LinkedIn post via Cathy's own LinkedIn account.

Yes, Walmart began piloting express delivery of meals from in store sales Subway restaurants earlier this summer, with the service live in select stores across Connecticut, Florida, Georgia, Ohio, Pennsylvania and Texas and expanding to roughly 1400 locations by the end of the summer.

Kathy detailed out that nearly 65% of restaurant orders were delivered alongside a Walmart grocery or essentials order.

And Walmart also says that one in five orders combining a restaurant item with a Walmart item is a customer's first time using express delivery this year, with nearly 30% of those new customers returning within the next 30 days.

Kathy framed the long term opportunity around proximity, noting that quick service restaurant brands are generally located within five miles of a Walmart store, which could put Walmart in more direct competition with DoorDash and Uber Eats over time.

Ken, as the newbie on the Omnitoc Retail Fast 5, I'm going to you first.

Walmart is signaling that it wants to use its store footprint as a delivery network for restaurants it doesn't even own.

Is this a genuine threat to DoorDash and Uber Eats?

Just a nice bolt on to grocery delivery or something in the middle?

I think just really at the end of the day it's a logical idea, but it's mostly a nice bolt on really.

Yeah, there's a few things.

One is, of course it's very logical to say, okay, if I'm doing a lot of home delivery anyway from the stores, we've got Subway in the stores.

You know, what can we add on?

Also that tends to be, you know, a good temperature state food service in terms of the timing of it.

If you back up though, you know, if you were fundamentally going to get in competition with DoorDash and Uber Eats and we've done some work on, on last mile delivery companies, you know, the economics are very, very challenging in the first place.

And then you've got the point about the operations.

You know, if I'm running, if I'm Walmart, I'm running a truck down someone's street, you know, once or twice a day.

That's very, very different operationally than having sort of an army of gig workers out there that can go point to point at any time of the day.

And so those agreements that the Door Dash Uber Eats of the world have with, you know, McDonald's.

Other QSRs, other types of restaurants can be very, very sophisticated and you really need a lot of customization, you need a lot of integration in terms of the systems and other pieces to make it work.

And so again, you know, they may, there may be one or two other QSRs where proximity or, you know, the type of food could make it a logical add on.

It's obviously a huge customer base.

They've done a great job with Walmart, plus expanding, yeah.

The footprint and who's eligible to participate.

The households in the US is amazing, on par with Amazon.

But at the end of the day my take is fundamentally different consumer need, fundamentally different operational service.

And so I would imagine it would be a little bit of an add on for the subways and the like, but minimal in total.

Okay, got it.

Okay, so you're thinking it's kind of, you're kind of going with the bolt on answer there, Ken.

All right, you're thinking it's a way for Walmart to defray the cost of the delivery.

Overall, I might disagree with you a little bit.

We're going to start the show off hot here, but before I give my, my take, I want to go to Michael.

Yeah, Michael, what do you think?

Yeah, I'm in the same camp as my kids would say, who are late teens, don't sleep on Walmart.

I think Walmart, okay, is by far the gorilla in any marketplace they get into.

I think the gorilla takes a bit to wake up and get out of bed and get into the gym and then get into the village and start having a gorilla presence.

But I, I think this is a huge step for them and I actually think it's all three things that you outlined, Chris.

I think it is competition, I think it's a bolt on, I think it's something in between.

And I think Ken's right.

The, the operational tactical detail, somehow, some way Walmart always figures that out and they're usually later to the party than most and most people discount their ability to get into these evolving and innovative markets.

But we just did some work where I realized that Walmart, if not all to digital pricing tickets so they can system wide update pricing and take markdowns.

That saves an incredible amount of labor costs across the board and you would never expect Walmart to be that cutting edge but overnight they just did it.

So I think I, I think this is an incredible move for them.

Unexpected.

And I think, I think the others, the competition should definitely be watching out.

Yeah, I I, I love that answer Michael, and I love how you said it's all three because that's why I wrote the question.

I actually think it's all three two.

But I was curious to see what conversation it engenders.

I agree with you because the point I would make too is and, and you have to answer that question now, but you also have to answer that question looking into the future 10 years and to me it's the Venn diagram of where the Walmart stars are located, where the Walmart stores are located, how many adjacent QSRs are in those strip malls.

And then you add in the drone delivery capabilities from those strip malls and that changes the economics of this and the long term potential of this very significantly.

Because the other point I would add, and then I'm going to go to Ben to get his final take here is you know, for me when I need something quick I go to Walmart.

Like I actually have been going to Walmart for my quick delivery needs over Amazon.

Like the other day I was on Amazon shopping for something and I was like why do I even need prime anymore?

Like Walmart has gotten its hooks into me on the speed of delivery.

And so I think that's another factor here in the long term.

But Ben, what do you think?

Yeah, and I think those speed of delivery and repeat rates that were quoted in the story that you said up front are really interesting.

Now look, it is a blog post by a company employee but you've got to, I'm going to take it on.

Face value, which is fascinating in and of itself.

But yeah, go exactly.

I mean the repeat rate, the trial rate, it's all about moving people to get used to this even quicker delivery.

And we know that's all about density.

So it's fascinating seeing this flipped.

You know the reason that Doordash and Uber Eats got into grocery is to drive that density and utilization.

So it's seen the same principles in reverse.

But I think the final point, I love that you've raised drones, Chris.

Last early last year I went to one of the Walmart stores in the Dallas Fort Worth area.

That's right where they, where they were running wing drones out the car park.

And I took some photos and some videos.

If I were to turn around and I went on Google Maps just to double check to look at the car park immediately behind me was a dunking donuts, a wing stop, a Taco Bells and an in out burger.

So there's the opportunity you don't have to over complicate the route Optimization to add this as a bolt on.

And I think I agree with you.

I think it's fantastic.

Wow.

Wow.

Okay, Ken, we gotta let you back in here because I think the three of us, I think we, I think the three of us technically disagreed with you and find that this is probably more, more than just hype in our opinion.

But so you get the last word here, Ken, what do you want to say?

I like, I like being the contrarian.

I think the one thing I would say is, yeah, I think you're right on the drone piece.

If, if the drone piece actually gets figured out and it can cover a sufficient part of the country.

So that doesn't change the game on the economics 100%.

Yeah, right, right.

That is a, that is a key factor.

And, and what about that personal post from Greg Cathy too, like this Walmart's the biggest company in the, you know, in retail and they're letting people do that.

That's just amazing to me.

That's why, that's why I think Walmart's onto something too.

And when they're talking about it like that in that way, it also is a signal generally that they're on to something or they're very confident in what.

They're doing as well because the one thing they've been very, very good at is they're, you know, continue to drive sales and growth on the existing asset base of the stores.

Right.

So the store count has not gone up.

In fact, it's down a little bit.

And yet sales continue to grow and grow and grow because they are driving it through digital platforms, through Walmart plus through delivery and so kind of sweating the assets in that way.

That's their wheelhouse.

Yeah, right.

And even if it is just an add on, that's still a really smart move too.

You know, to your point, Michael, you sounded like you want to say something and then we'll have Ben introduce the second half.

I was just going to say they're, they're so incredibly clever.

That guaranteed that post was premeditated.

And I mean especially in the digital marketing age, in this sort of new evolution of digital marketing.

So I, and once again, I love it, I think and Walmart for me has always been something that I love and, and watch and admire because so many people have counted them out so many times and have been anti Walmart.

And I honestly, they're amazing.

I think they're super progressive.

One of the, one of, I used to love telling the story.

One of the topics of like cocktail parties, whenever I told anybody was in retail years ago and they were talking about Amazon, like, oh, Amazon's going to kill Walmart.

Right?

Walmart's done.

And the answer is no.

I think Walmart is an incredibly progressive, yet quietly progressive entity.

Yeah.

And that's the watch out for everybody else in the market.

As Walmart and Amazon and Uber and DoorDash build these delivery networks at increasing speed and increasing density, how does everyone catch up?

Fantastic to watch.