Walmart's warehouse club ratchets up pressure on Costco with a new member perk
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- Walmart has made a big bet on ultrafast delivery across its US stores.
- Now the company is bringing the perk to Sam's Club, with a new one-hour service option for members.
- Sam's Club says its 10 fastest orders were fulfilled in under 12 minutes — way faster than Costco.
Walmart is doubling down on ultrafast delivery with a new option at its warehouse chain Sam's Club.
On Wednesday, Sam's Club e-commerce head Greg Pulsifer said a new "enhanced" express delivery option in the US has posted impressive numbers since it was rolled out three weeks ago.
"Our 10 fastest deliveries to date were all fulfilled in less than 12 minutes," he said in a statement.
Members can now get Sam's Club's jumbo pack sizes with Walmart's blazing-fast fulfillment.
The move ramps up pressure on warehouse club rival Costco, and underscores Walmart's focus on growing e-commerce sales through a combination of convenience and value.
Last September, Walmart's then-US CEO John Furner said Walmart's fastest delivery time was under five minutes. The company also says more than 5% of store-fulfilled orders arrive in less than 30 minutes.
Sam's Club has also had significant success with rapid fulfillment at international locations, most notably in China.
Faster fulfillment with a flat fee instead of higher prices per item
At Sam's Club, sub-three-hour deliveries cost $17 for standard members and $5 for higher-tier Plus members and arrive within three hours, while the faster delivery option costs an additional $5 to get the order in less than an hour for both membership types.
Ralph Asher, founder of Data Driven Supply Chain, told Business Insider that this ultrafast delivery option could give Sam's Club an advantage over its larger rival, Costco, especially since the product prices online match those at the warehouse.
Costco's same-day services, which offer delivery in as little as an hour, are fulfilled by Instacart, and items are typically priced higher than those in-store. Costco says the higher prices allow most orders to avoid additional delivery fees, though long-distance orders are subject to a $10 fee.
Costco did not immediately respond to a request for comment on its delivery strategy.
Sam's Club says it has now fulfilled nearly 65,000 orders under its three-hours-or-less delivery option, with an average delivery time of 55 minutes.
Top categories for express orders include water, produce, paper goods, and baby items, with more urgent items like baby formula and rotisserie chickens arriving in as little as 10 minutes. The fastest order Sam's Club says it fulfilled was the delivery of Member's Mark baby formula to a day care in Fargo, North Dakota, in nine minutes.
Asher said the logistics of delivering club-sized products aren't all that different from delivering typical retail pack sizes — so long as the order fits in a gig driver's car — but the lower unit cost of the club-sized item could make it a better deal for consumers.
And Sam's Club isn't doing this for fun. There's a significant upside for sales growth.
Walmart has said that its fast delivery shoppers spend twice as much as the average digital customer. That figure jumps to three times as much when shoppers use fast delivery four or more times.
Your move, Costco.
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