Google-backed Deliv breaks off grocery partnership deal with Wal-Mart

Wal-Mart is in the process of fixing the issues due to which it had to cut its ties with the logistics firm.

In a significant development that marks a setback against Wal-Mart’s efforts to fight Amazon.com in the groceries segment, logistics firm Deliv and Walmart Inc have discontinued their same-day grocery delivery partnership.

In 2018, Wal-Mart, the world’s largest brick-and-mortar store, had bolstered its partnerships with third-party firms so as to reach customers in 100 cities. Its attempt to use Lyft and Uber to deliver groceries also did not fruition.

According to 2 sources familiar with the matter at hand, Deliv,one of Walmart’s earliest partners in Miami and San Jose, had served Wal-Mart with a 90-day termination notice. Both companies stopped working together in late January.

Wal-Mart has confirmed the development saying it still partners with 7 other delivery firms, including Postmates and DoorDash. It has signed up four such firms in January 2019.

According to sources familiar with Walmart’s partnership with Deliv, Deliv drivers had to frequently wait 40 minutes or more to collect grocery orders when they showed up at the store. One of the reasons for this delay is that Walmart gives priority to customers over delivery drivers during regular hours; this has complicated the partnership.

As per a source, the store operations at Walmart “were a huge problem,” and that Wal-Mart could not “process online grocery orders fast enough.”

Deliv declined to comment.

According to Molly Blakeman, Walmart’s spokeswoman, the two mutually decided to end the partnership.

“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 program at this time.”

Blakeman went on to add, same-day grocery deliveries is available in 800 of its 5,000 plus stores in the U.S. Wal-Mart aims to add 800 more to this count.

According to both sources, another reason for the discontinuation in the relationship was that order volumes were low in many markets; also orders had to be delivered over large distances resulting in both Deliv and Walmart losing money.

“When the partnership with Deliv was struck, the hope was that demand will be stronger than it is now,” said a source.

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

In October 2018, it raised $40 million in a new round of financing from investors, which included Alphabet Inc’s Google and United Parcel Service. Further, in December, it signed up 20 new U.S. retailers including Nordstrom and Nike Inc.

While Deliv can process and deliver thousands of orders per hour, in San Jose it was doing business with Walmart for only a hundred orders a week; there were also issues processing this volume through stores, said a source who went on to add, Walmart is now working to fix this problems at its stores.

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