Walmart Needs a Better Grocery Strategy

Walmart wants to put groceries straight into your fridge. Here's how the retail giant can turn the dream into reality.

Walmart Groceries
Walmart is in the process of testing grocery delivery directly to the refrigerator. Chris Hondros/Getty Images

President and CEO of Walmart eCommerce, Marc Lore, recently made a video demonstrating how Walmart proposes to pick groceries from inside a Walmart store and then deliver the groceries directly to a customer’s refrigerator. According to Lore, gaining access to a customer’s home and delivering groceries is a way to increase the customer experience and save customers’ time. I get it, makes sense.

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However, note to consumers: Under no circumstances should any consumer allow a delivery person from Walmart to enter their home until Walmart confirms that the company drug tests, conducts random drug tests, and conducts thorough in-depth criminal background checks on all associates who enter homes to make deliveries. In addition, Walmart should be forced to prove that it can monitor whether or not delivery drivers return to a home where a delivery had been previously made to prevent stalking. If Walmart wants customers to let a stranger into their home, Walmart (and any other retailer) should be forced to prove all risk to customers has been eliminated.

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I take the topic of customer safety seriously based on emails I receive from gig workers who deliver groceries alerting me to drug use, theft, mental illness and crime they have witnessed committed against customers. The number of emails I have received is so alarming that I contacted several major news outlets, and they’re in the process of conducting investigative reporting on several grocery delivery companies to expose the truth. The fact of the matter is that many grocery executives are comfortable overlooking issues related to companies that deliver groceries to their customers because the percentage of online grocery orders is so small. I recently wrote an article about a gig worker who contacted me raising the alarm that the Fresh Market would be wise to exercise caution in signing an agreement with Instacart (CART).

I applaud Walmart for trying new things. In fact, I spoke with Marc Lore at Jet.Com’s headquarters several years ago, and one of the topics Lore asked my opinion on was home delivery of groceries. I made the comment to Lore that I believe Amazon or Walmart would be the first company to offer a service in which groceries could be delivered inside the home, including directly to the refrigerator. However, I stressed the importance of mitigating all risks to customers. Lore agreed.

For the record, I like and respect Marc Lore very much. Among the comments I have made about Lore in recent months in articles or at conferences where I’ve spoken include the following:

Industry analysts and Wall Street continue to overlook the possibility of Google, Microsoft and Facebook becoming retailers. Imagine if Microsoft turns LinkedIn into an e-commerce platform? What if Facebook acquires Shopify or eBay and gives users access to e-commerce from their Facebook user page? What if Google acquires Costco or Target? The future of commerce is a balance of stores and online capability. Imagine if the CEOs of Google, Facebook or Microsoft asked these questions: How do we become the largest retailer in the U.S. and globally? Why do we have to enable retail for others, why can’t we reimagine retail as a retailer? How do we become the largest grocery retailer? All that it would require for Facebook, Google or Microsoft to succeed and completely disrupt the retail status quo is to hire one man—Marc Lore.  

I have also made comments about Walmart CEO Doug McMillon. I believe McMillon is the second best CEO Walmart has ever had; only Sam Walton can be considered a better CEO than McMillon, and that’s debatable.

Doug McMillon, president and CEO of Walmart.
As I have written many times, I expect more from Walmart than any other retailer because the company has executives like its CEO and president Doug McMillon. Mark Wilson/Getty Images

I wrote the following about McMillon in this July 2018 article:

At most, Donald Trump can serve as president no longer than 2024, if he is reelected. In 2024, the Republican Party will need a candidate that is intelligent, politically savvy, knowledgeable of the global economy and economics, a candidate that has a backbone and a point of view on social issues, and a candidate capable of learning quickly on the job. The Republican Party will need a candidate who is willing to get involved versus looking the other way. The Republican Party will need a leader.

My advice to the Republican Party is to look toward Bentonville, Arkansas, as Doug McMillon, CEO of Walmart, has what it takes to become President of the United States. Whether or not McMillon runs as a Republican, a Democrat or will be willing to run at all, is unknown and up for debate. What isn’t up for debate is this: McMillon being able to do the job.

Think it can’t happen? I bet Hillary Clinton will say it can.

I am not anti-Walmart in any way shape or form. I criticize Walmart in this article, but I also offer solutions that I believe Walmart can and will implement. As I have written many times, I expect more from Walmart than any other retailer. Why? Because Walmart has Marc Lore, Doug McMillon and the brightest mind in the grocery business, Greg Foran, president and CEO of Walmart U.S., as executives.

Breaking the Cold Chain

When the video of Lore appeared, I received inquiries from the press, executives at competitors of Walmart and several executives and associates at Walmart, who contacted me seeking my opinion. Individuals within Walmart are constantly trying to get me to write something positive about Walmart’s last-mile delivery and online grocery strategy. I have researched Walmart for the last two years, and I continue to have conversations with Walmart resources. The belief of many inside Walmart was that the video of Lore would be the catalyst to finally convince me that Walmart is ready for prime time. Unfortunately for Walmart, after viewing the video of Lore and based on my own research, I am convinced that Walmart needs an entirely new strategy for how it picks and delivers groceries.

To begin with, Walmart proposes to have its drivers deliver groceries to customer and return to the store where they departed in no more than 60 minutes. One driver equals one customer delivery. I do not agree with the strategy, and at first, I couldn’t figure out why Walmart would implement such a strategy… until I saw the video of Lore fulfilling an order inside a Walmart store. And then I saw it—the reason why Walmart is using one driver to make one customer delivery is because Walmart doesn’t have a solution to ensure the cold chain integrity of the groceries being picked.

Walmart truck
Walmart proposes to have its drivers deliver groceries to customer and return to the store where they departed in no more than 60 minutes. One driver equals one customer delivery. George Frey/Getty Images

Watch the video of Lore. Notice anything unusual? Products that are required to be chilled or frozen are being picked and placed into plastic tubs that aren’t temperature controlled. (The cold chain is broken the minute products are pulled from a chilled or frozen temperature environment.)

Walmart, like most grocery retailers, wants online grocery orders picked in no more than 30 minutes. The groceries are then transported to a staging area where they are placed into grocery bags and then placed inside an insulated tote. This is where the process breaks down for Walmart; the company doesn’t have the ability to stage multiple orders that have been picked so that orders can be consolidated into one vehicle for delivery. For example:

1. Assume 10 online orders for groceries are placed, and pickers go about the process of fulfilling orders inside a Walmart store.

2. The cold chain is broken when groceries are picked. Walmart doesn’t utilize bags capable of keeping groceries at the optimal chilled or frozen temperature during the picking process. This also prevents any chance of Walmart staging grocery orders that have been picked so they can be consolidated and routed (e.g., seven bags of groceries are assigned to driver one and three bags of groceries are assigned to driver two).

3. Without an ability to stage groceries in bags capable of maintaining the cold chain, Walmart has no choice but to pick and deliver the groceries as soon as an order has been fulfilled.

Until Walmart can stage and consolidate multiple grocery orders, its last-mile delivery costs will be exceptionally high as most orders will have a one-to-one ratio: one online order equals one delivery to a customer per vehicle.

Walmart is in the process of testing grocery delivery directly to the refrigerator. Even if groceries are picked and delivered to a refrigerator in an average of 90 minutes, however, the cold chain must be maintained throughout the entire process of picking and transporting groceries.

For grocery deliveries made to the home when a customer isn’t home, Walmart mistakenly wants to provide customers with storage boxes (or facilitate a third-party to provide storage boxes) that sit on a porch for groceries to be placed into. The storage box is not chilled or frozen. I estimate that Walmart is considering having customers place some type of frozen bag into the box to keep groceries chilled when delivered by Walmart. Walmart, let me be clear—this is a terrible idea. I have evaluated several leading storage boxes on the market, and most are unable to meet the growing parcel and online grocery delivery needs of customers. The only storage container I can recommend is DynoSafe, but placing a storage box on a front porch is not the option I prefer for parcel or grocery delivery. More on this later.

The Solution for Picking and Staging Groceries

Instead of pulling perishable products from coolers and freezers and placing the products into plastic containers and plastic bags that aren’t temperature controlled, Walmart should leverage commercial-strength, freezable and reusable totes designed specifically to hold groceries for delivery to customers. (I wrote about the need for Walmart and grocery retailers to use freezable bags in this December 2018 article.)

A company called PackIt, founded by CEO Melissa Kieling, invented and sells the exact bags I recommend that Walmart utilize to pick and deliver groceries. I recommend PackIt based on a review I conducted of multiple companies that sell products most commonly used by retailers during the process of storing and delivering groceries. PackIt is the clear leader in the industry. PackIt’s revolutionary materials can keep products cold or frozen between 12 to 48 hours. PackIt’s solutions can keep food warm or hot as well. The quality of the product is second to none. (I have no business relationship with PackIt, nor have I ever been compensated by PackIt.)

PackIt also offers customized solutions to retailers. For example, PackIt can design a commercial product whereby 24 or more bags of groceries can be fitted into individual compartments placed inside a sealable container. The bag can then be sealed to keep the groceries cold for up to 48 hours. This type of product is ideal for storing groceries at stores that offer curbside grocery pickup. (I strongly advise Walmart to evaluate such a product as Walmart is a leader in curbside pick-up.)

The value to Walmart is that by utilizing bags by PackIt, Walmart can pick individual grocery orders, stage the orders over a period of several hours with no harm to the perishable products as the cold chain is maintained, and then consolidate multiple orders to fill up a delivery van or truck. See where I’m going with this? Instead of sending out one driver to make one or two deliveries of groceries at most in a 60-minute window, Walmart can utilize all available capacity in a car, van or truck and then optimally route the van to make deliveries depending on the number of bags required to fill all orders. Imagine the level of efficiency gained by Walmart if it only dispatches vans that are full of grocery bags for delivery. Maximizing all available cube space in a van greatly reduces logistics costs. Because of the ability of PackIt’s bags to keep groceries chilled and frozen, there is no need to use refrigerated vans or trucks to make deliveries, thus further reducing costs.

A little-known fact is that Walmart is testing micro-fulfillment of online groceries using robotics and automation. Based on discussions with personnel from Walmart and several micro-fulfillment companies, a challenge Walmart will face is maintaining the cold chain during micro-fulfillment. I’m confident Walmart can turn to PackIt to find a solution for leveraging PackIt’s bags, even with micro-fulfillment, to ensure freshness of perishable products.

Additional value would be provided to Walmart as PackIt’s new line of commercial products are super-simple to use. The entire bag completely freezes without the need to ever add gel packs, ice or frozen water bottles. In addition, the totes from PackIt are reusable, eliminating tons of totes, gel packs and other workaround items from ever going into landfills or clogging up storage areas inside a store. Walmart is a company that cares about sustainability, and PackIt is a solution that is good for the environment.

Walmart can recognize savings throughout the supply chain because of the extended cooling duration offered by PackIt’s innovative design and products. In addition, costs are reduced because gel packs, ice bags, water bottles and other materials are eliminated from the process of storing and delivering groceries. Online grocery ordering, fulfillment and delivery is a razor thin margin business. Any opportunity for reducing costs is a wise investment.

As a company, PackIt can also manage the pickup of totes from customers and return the totes to Walmart stores or off-site collection points for disinfecting, cleaning, consolidation and shipping. One of the biggest customer complaints is totes piling up after groceries have been delivered to a home on multiple occasions. PackIt’s last-mile pickup and delivery service removes the friction for customers and the retailer.

Don’t believe me that maintaining the cold chain is a must-have to provide customers with the best experience and grocery quality, Walmart? Go ask Greg Foran. I can assure you that he will agree with everything that I have suggested up to this point.

The eDOR vs. Parcel Boxes and Storage Containers

As mentioned earlier, my research ( and my suspicion) leads me to believe that Walmart has plans to either offer parcel storage boxes to its customers to use for package and grocery delivery, or Walmart will facilitate a relationship between a third-party to offer storage boxes to its customers. Package theft is a growing problem, and leaving groceries on a front porch with only gel packs or frozen water bottles inside to keep the groceries cool is a very poor solution. As I stated earlier, a product like DynoSafe is well-worth the investment and the founder of the company, Rebecca Romanucci, has done an excellent job of creating a quality product.

However, my argument is this: Delivering packages or groceries to a porch or to a front door doesn’t add the most value. I agree with Walmart that the optimal solution is for packages and groceries to be delivered inside the home and groceries placed in a refrigerator. The challenge is that most consumers rightfully don’t want strangers in their home, regardless if their wearing a body camera or not. Therefore, I believe the optimal solution is to deliver packages and groceries inside the home without a person ever having to physically go inside. How can this be accomplished? The eDOR.

I first wrote about the eDOR in this September 2018 article. What makes the eDOR unique is that it has been designed with e-commerce and grocery delivery in mind. Packages can be placed inside a receptacle that is part of the door. Groceries can be placed inside a temperature-controlled receptacle that is also part of the door. Dry cleaning and packages of varying sizes can fit into the specially designed slots in the door. The value to consumers is that almost any package of any size can be delivered and placed into a lockable receptacle without anyone ever setting foot inside the home.

Installing the eDOR is as simple as removing the current door on a home, apartment or business. No special construction is required. Consumers also have the choice of keeping their current door and having a smaller version of the eDOR retrofitted to their door. (I don’t recommend this option due to the expected growth of e-commerce and online grocery delivery. I believe installing a fully capable eDOR makes the most sense.)

I believe Walmart should acquire the company that designed the eDOR and in turn, partner with Home Depot, Lowe’s or some other company to install the door. Frankly, I believe Walmart should acquire Best Buy and leverage the Geek Squad to install the door and place Walmart as the leader in providing consumers with services to meet all their needs for the connected home, appliance repair and so on. Walmart could offer the eDOR for a low-monthly fee, which would include installation and maintenance. Walmart could even partner with FedEx on the eDOR and charge Amazon (AMZN), UPS and the U.S. Postal Service a fee to access the eDOR.

I believe the optimal solution for Walmart is to form a partnership with Royce Newcomb, founder and chief designer at Strategic Innovations, the company that invented the eDOR, or acquire the company. In addition, Walmart should form a partnership with Rebecca Romanucci to offer customers the DynoSafe, if that is what they prefer. I recommend that Walmart speak with PackIt about designing and providing a storage container specific to the needs of Walmart. The bottom line is this: eDOR, DynoSafe and PackIt are well worth the time and effort for Walmart to contact and assess.

Don’t shoot the messenger, Walmart. I am not criticizing you, I am challenging you to live up to your full potential. You’re Walmart. I have a right to expect you to lead and not follow.

Walmart Needs a Better Grocery Strategy