Walmart Just Fired a Shot at DoorDash | Fast Five Shorts

Walmart is now delivering Subway sandwiches directly to customers through the Walmart app and Walmart.com, marking the first time a major retailer has integrated made to order restaurant meals into its express delivery service.

Announced during Walmart's shareholders week In Bentonville on June 4, the service allows customers in select markets to order freshly made Subway meals for delivery in as little as 30 minutes on their own or bundled alongside groceries, prescriptions and household staples through Walmart's existing express delivery service.

The service has been tested in Connecticut and Dallas thus far, and Walmart plans to expand it to approximately 1400 Walmart Supercenter locations where Subway franchises operate inside the stores by the end of the summer.

This move also puts Walmart in more direct competition with UberEats and DoorDash as it now combines grocery and meal delivery under a single transaction and app experience with further room to grow over time because according to Friend of OmniTok Walmart SVP Greg Cathy quote almost all quick service restaurant brands are within five miles of a Walmart store.

End quote.

Chap.

Walmart has officially entered the food delivery wars.

Is Subway delivery a flash in the pan or a sign of yet another consequential growth strategy for Walmart?

Wow.

So Chris, I'd have to say Uber Eats and Door Dash.

I hope you are paying attention because wow, a shot has been fired across your bow.

You know delivery infrastructure seems to be Walmart's flywheel right now, so this clearly makes sense for them with basket size.

More reason to shop there.

Free delivery of the subway if you're pairing it with groceries.

So it gets more use cases into this delivery flywheel.

And of course the biggest use case of all in delivery for fast delivery is restaurants.

And when you pair this with the drone infrastructure as well, your head starts to explode with the possibilities.

So yes to Subway, but a bigger yes to Jimmy John's and Jersey Mike's et cetera.

If Walmart can figure out a middle mile infrastructure that connects the delivery execution from Walmart to stores surrounding the restaurants.

Yes.

Now all of a sudden Walmart is your super app for food delivery.

The downside here I see is that Walmart is attaching their delivery execution to Subway's execution.

Right?

And any other restaurant that comes into this, something I am sure that they will monitor.

But if delivery is the thing that's building trust and improving repeat purchase rate, which is what Walmart said in their last quarterly earnings, then be careful here.

But overall, as a retail supply chain guy, I love seeing retailers make hay with their supply chain assets and nobody has that more dialed in than Walmart right now.

Yeah, Chad, I'm curious that the point about the drone thing is really interesting.

I hadn't thought about that either.

So, like what?

So you know, delivering Subway out of the store is one thing.

Coordinating deliveries with, you know, existing retailers around Walmart is another thing.

And then coordinating drone deliveries from a Walmart with those existing retailers is then a third thing.

So what are some of the complications that arise as you go from, you know, each of those, you know, as, as Walmart?

Yeah, well, I, I, I think obviously you know, Walmart's scaling drone drones aggressively because they've got parking lots, right.

They've got the infrastructure.

And I think the complicating factor on how, how do we connect more delivery use cases and then we pair it with drones is like, well what is this?

Weren't, you know, how do we get drones into some of these other locations that aren't going to have that kind of real estate to do that with?

Which is where I think there needs to be some interesting middle mile infrastructure that might not be drones, it might be motorcycles or bikes.

Right.

That's connecting the, the food service with the main delivery infrastructure because obviously we still gotta execute on speed here.

So we can't like make milk runs over five hours to pick up food orders and then bring it back to Walmart.

So it's going to be a super complicated dance.

But I mean if anyone can figure out that dance, I would think it would be, it would be Walmart.

Yeah, but Chad, I think to your point too, I think we also, you know, it's interesting to me, like they said 1400 subway locations, you know, in a Walmart store there's probably X number of the 4600 Walmart Super Centers that have, you know, restaurants in the same strip mall as them as well, where that parking lot is very readily available to them tie into the drones too.

So it doesn't necessarily need to be an all or nothing thing, which I'd never thought about until you just said that because you know, there's probably some subset of stores where this is going to work.

And you know, for that reason, I'm with you man.

I think, I think this is a brilliant extension and it's, it's something that I actually have firsthand experience trying to, you know, get going at Target too.

But you know, first, the first thing I'd say about it is it's like you said, it makes you really sticky to Walmart if they pull it off because food delivery is something especially in those higher income demographics which Walmart's also trying to push its way into.

Yeah, they come, you know, if you're, if you're using food delivery, sometimes you're doing it multiple times a week, more often than you're probably interacting with Walmart on a given week.

And then the other thing too I talk about in the delivery space is, you know, the size of the basket is so integral to making that delivery profitable.

So even if, you know, even if you take the drones part out of it in the long run, there's still just good economics here in terms of what they're trying to do just even with Subway out of their stores so you get the basket size increase, that's what you want.

And then the other thing too, I'll say in closing and then we'll move on is I think if you're keeping score at home, you have to keep score at home here because just between this show and last week alone, I want to, I just want to break down Walmart's growth strategies.

I did it a little bit last week, but you've got Walmart's marketplace, you've got them going up market with Walmart plus, which they also just took to Canada, which didn't even make this week's Fast five headlines.

You've got the convenience play with drones overall just for the average convenience purchase.

And now you've got restaurant delivery and the future of restaurant delivery too.

And all of those, all of those when they're working together, expand your retail media reach too, which means you're going to get even more profit.

So it's perfect synergy and it's, it's just a testament, like you said, to how Walmart is humming on their fulfillment capabilities right now.

Chap.

Yeah, yeah, yeah.

Watch out world.

Walmart seems to have it dialed in right now.