Walmart. Picture: SUPPLIED
Walmart. Picture: SUPPLIED

Washington — Walmart and logistics firm Deliv pulled the plug on a same-day grocery delivery partnership, dealing a setback in the retailer’s race against rival to deliver groceries to customers’ homes.

The world’s largest retailer began bolstering its partnerships with third-party courier firms to reach consumers in 100 US 2cities last year after failing to use Uber and Lyft to deliver groceries and struggling in its attempt to use its own employees to deliver goods.

Deliv, which was one of Walmart’s earliest partners, with pilot programmes in Miami and San Jose, served the retailer with a 90-day termination notice. The two companies stopped working with each other late in January, according to two informed sources.

Walmart confirmed the previously unreported decision and said it still partners with seven delivery firms, including DoorDash and Postmates, four of which it signed up in January.

Sources familiar with the Walmart-Deliv partnership said Deliv drivers often had to wait 40 minutes or more to collect grocery orders at the store. Walmart giving priority to customers over delivery drivers during regular hours complicated the partnership.

Walmart store operators “were a huge problem,” said one of the sources. The retailer could not “process online grocery orders fast enough”.

Deliv refused to comment. Walmart spokeswoman Molly Blakeman said: “As with any pilot, the intent is to learn. And we ultimately came to the conclusion with Deliv that while their platform is a good delivery option, it was not the best fit for our programme at this time.”

Blakeman said same-day grocery delivery was available at 800 of its more than 5,000 US stores and warehouse clubs. The retailer planned to add 800 this year.

Deliv offers scheduled same-day deliveries through gig drivers, a model that can work well with faster order processing and an improved ability to predict demand and robust volumes. Walmart is now working mostly with restaurant delivery firms that deliver orders as and when generated, said one source.

The sources said order volumes were low in many markets. One said orders had to be delivered over large distances, resulting in Deliv and Walmart losing money. “When the partnership with Deliv was struck, the hope was that demand will be stronger than it is now.”

Deliv operates in 1,400 US cities, tapping into networks of local freelance drivers to deliver packages same-day for a fee for a range of retailers, from Home Depot to Kohl’s Corp.

In October, it raised $40m in a new round of financing from investors, including Alphabet’s Google and United Parcel Service. In December, it signed up 20 new US retailers including Nike and Nordstrom.

Deliv can process and deliver thousands of orders in an hour. Walmart in San Jose was sometimes generating only a hundred orders a week. There were problems processing that volume through stores, one source said. Walmart was working to fix problems at its stores to process orders faster.

Blakeman said there were no problems with order volume in the market.

The sources also told Reuters that Walmart has ended a separate grocery delivery test from 2017, in which it partnered with smart-security company August Home and Deliv for keyless entries to shoppers homes to deliver groceries directly to their refrigerator.