With the announcement that Wal-Mart (WMT) is about to enter the online grocery market, it looks like years after online grocery sales was expected to happen, it is now finally upon us.
Of course most of us know that Amazon.com (AMZN) has been doing this for about a year, and has recently started to offer perishable goods, along with non-perishable, in targeted neighborhoods in its home market of Seattle. It uses its own fleet of trucks when delivering perishable items.
What the entry of Wal-Mart does is create the type of competitive environment that will help the initiative to go forward, which should help the space to grow quicker.
While Amazon.com offers prices of about 30 percent below regular supermarket prices, Wal-Mart, as usual, will do them a little better, and start off 5 percent below Amazon's prices. Competition is already starting to help the consumer. Amazon does offer free shipping on large orders.
For those of us who remember the Webvan debacle - which ended in bankruptcy and a loss of about $800 million - it set back the online grocery industry for years in the U.S.
I tend to think the low prices offered by Amazon.com has resulted in Wal-Mart having to respond, as it probably has cut into their sales and profits in the markets Amazon serves.
Wal-Mart will offer the new online grocery service through its Sam's Club stores exclusively at this time. The company will also adapt the basic model Amazon uses by delivering non-perishable items via parcel service.
With Wal-Mart now competing in the space, it will only be a matter of time before online grocery shopping becomes a regular part of American consumers' lives. It's already pretty common in certain parts of the UK and Europe.
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