Please ensure Javascript is enabled for purposes of website accessibility

Another Delivery Service Just Cut Ties With Walmart

By Rich Smith – Feb 21, 2020 at 12:12PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

It may not be the last.

Searching for allies in its fight against Amazon's multiple free delivery options, last year Walmart (WMT -2.50%) 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.

Blur grocery cart icon button on a keyboard

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.

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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Walmart Stock Quote
Walmart
WMT
$130.06 (-2.50%) $-3.33

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
329%
 
S&P 500 Returns
106%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.