Walmart Can't Stop Countering Amazon: Offers Meal-Kits Online

Wal-Mart Stores Inc. (NYSE:WMT) , soon to be branded Walmart officially, seems to be leaving no stone unturned to counter Amazon’s (NASDAQ:AMZN) rising dominance. Rounds were made recently that this supermarket giant has forayed into the meal-kit space — a card already played earlier in the year by Amazon.

Well, sources revealed that Wal-Mart started selling meal-kits online toward the beginning of this month, giving competition to other meal-kit players like Blue Apron (NYSE:APRN) , HelloFresh and Plated. The big-box retailer is offering these kits through alliances with Home Chef and Takeout Kit, which are responsible for the fulfillment and delivery of these orders. Takeout Kit offers a wide range of global options, whereas Home Chef’s offerings are more on the classic side.

While Takeout Kit and Home Chef conduct the entire selling process, Walmart receives a small commission as well as a referral fee. The company’s meal-kit price ranges from $32 to about $79, with each kit serving roughly four people, as per media sources. Wal-Mart, which began this new venture with approximately 30 kits on its website, already has some options sold-out.

Wal-Mart Takes on Amazon

This move marks another strong step by Wal-Mart to take on Amazon. The e-commerce king, which shook the grocery industry with its takeover of Whole Foods Market (NASDAQ:WFM), ventured into the meal-kit space this July. Moreover, Amazon partnered with Allrecipes last month, to facilitate meal preparation delivery. Amazon’s favorable pricing and robust presence remains a threat for players like Blue Apron, which saw its stock price suffer when Amazon entered the meal-kit market.

Apart from this, the online biggie’s strategies like AmazonFresh grocery services and Amazon Go grocery stores underscore its focus on exploiting each nook and cranny of the retail food space. Nevertheless, Wal-Mart has been trying all means to take on the e-commerce giant. In this regard, the world’s largest retailer has been taking several e-commerce initiatives, including buyouts, alliances, and improved delivery and payment systems. These splendid endeavors have also helped Wal-Mart put up a robust past record, driving its shares 46.6% this year, crushing the industry’s 35.5% rise.

Notably, Wal-Mart is making aggressive efforts to expand in the booming online grocery space, which was a major contributor to its e-commerce sales in the third quarter of fiscal 2018. In fact, Wal-Mart’s efforts to enhance its delivery services also resonate quite well with the company’s strategy of growing its online grocery sales. Incidentally, the company’s fiscal third-quarter e-commerce sales received significant contributions from Walmart’s online grocery service, which has now expanded to over 1,100 locations, and is anticipated to have 1,000 additions next year.

All said, we believe expansion in the $5 billion U.S. meal-kit space marks just another step by Wal-Mart to strengthen its online food foothold as well as the company’s position against Amazon. As Wal-Mart seems to be in the initial and testing phase for meal-kit deliveries, let’s see if this also turns out to be another successful venture for the Zacks Rank #2 (Buy) company over the long run. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Amazon.com, Inc. (AMZN): Free Stock Analysis Report

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