Updated with data from Walmart.
According to a new blog post from Walmart, the world'a largest retailer is expanding its free curbside pickup of groceries into eight new cities this month. The expansion will increase the number of stores with the service by a third to about 200. In addition to new availability in Kansas City, Mo., and Austin, Texas, the service will arrive to select stores in Boise, Idaho; Richmond and Virginia Beach, Va.; Provo, Utah; Daphne, Ala.; and Charleston, S.C.
Walmart's grocery service is relatively convenient.
Customers place their grocery orders online, choose a time to pick them up and then pull into a designated parking spot when arriving at the store. From there, a Walmart worker brings the groceries to the person's car.
So far, online grocery appears to have been successful for Walmart, which continues to report weak store sales as more people shop online and move back to urban areas. About 90% of online grocery users are repeat customers, and more than 90% of the orders include fresh grocery items such as dairy, produce and meat, the company said.
The company's research has also found diapers and baby products are top-sellers among Millennial moms using the service. The reason? They want to get out of the house for some air.
"We've had a really good experience [with online grocery] in the markets that we've been in -- we know from our tests that we started in Denver last year that we do pick up incremental customers," said Brett Biggs, Walmart's executive vice president and chief financial officer, at an investor conference on March 15. Biggs added, "In that test, about 25% of the customers in online grocery were new customers to Walmart, which is really, really important."
The findings are good news for Walmart as it derived about 56% of its business, or $166 billion in sales, last year from selling groceries, making it by far the country's largest grocer.
Still, Amazon's expanding online grocery delivery operation holds one distinct advantage vs. Walmart: Time-starved Americans don't have to visit a physical store.
AmazonFresh, the Internet giant's online grocery business that originally rolled out in Seattle in 2007, delivers groceries straight to a person's house within hours. To access the service, a person needs a Prime Fresh subscription that costs $299 a year. Order minimums are $50.
The service has since expanded to New York, New Jersey, Pennsylvania, Connecticut, California, and Maryland.
Working in Walmart's favor, however, is that it's able to more quickly scale its online grocery business as it operates more than 4,500 stores in the U.S. Not having physical stores has held Amazon back in the increasingly competitive grocery delivery business.
"Grocery has been a relatively measured roll-out by Amazon standards -- we continue to work on the customer experience and making sure we're really delivering a quality experience for shoppers, and we're also working on the economics," conceded Phil Hardin, Amazon's director of investor relations, on an Oct. 23 call with analysts.