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Another Delivery Service Just Cut Ties With Walmart

Searching for allies in its fight against Amazon's multiple free delivery options, last year Walmart (NYSE: WMT) announced it was signing up four new delivery companies -- Point Pickup, Skipcart, AxleHire, and Roadie -- "to help expand the retailer's popular Online Grocery Delivery option." For a small fee, and so long as a customer placed at least a $30 minimum order for groceries, one of these four companies would deliver the goods as soon as the same day -- no subscription necessary.

Make that one of those three companies, now, because barely a year into its contract with Walmart, Skipcart has announced that it is cutting ties with the retail giant effective sometime in March.

Prior to termination, Skipcart had serviced 126 Walmart stores in 32 states -- about 8% of Walmart locations that provide grocery delivery -- making approximately 50,000 deliveries per month within mostly smaller markets.

Image source: Getty Images.

Bloomberg notes that this is the third major defection from Walmart's delivery network to date, following Uber's defection in 2018 and Deliv's in 2019. And it probably won't be the last.

Quoting Skipcart CEO Ben Jones, Bloomberg notes that Skipcart was losing money "hand over fist" working with Walmart. And this problem is bigger than Skipcart.

After a breakup, one must always take a jaded partner's words with a few grains of salt. Still, according to Skipcart's Jones, "all" of Walmart's delivery partners are losing money, and it's a situation that will not change.

"The grocery model does not work," said Jones, "it doesn't work today, and it's not going to work six months from now."

Unless someone figures out a better way to make money, this fast-growing segment of the grocery business could come to a screeching halt.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Rich Smith has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon. The Motley Fool recommends Uber Technologies. The Motley Fool has a disclosure policy.


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