North Bay businesses skeptical of Walmart’s offer to handle their last-mile delivery

Walmart’s announcement that it wants to connect with small and medium-sized businesses to become a local-delivery partner, is being met with surprise, skepticism and even cautious hopefulness by some businesses.

“I think for the customer who is trying to support small business, it would be a turnoff to see the Walmart name attached to it,” said Emily Rich, who owns the Village Child in Novato. “Walmart, don’t you have enough of the pie?”

One of the world’s largest retailers on Tuesday announced that it was expanding its last-mile delivery service to include the inventory of other businesses. Called Walmart GoLocal, this builds on the retail giant's effort for the past three years to build a delivery offering that leverages its existing network of stores and distribution warehouses as well as new “market fulfillment centers.”

The push comes against the rise of Amazon, which has already proved to be a serious competitor for store sales for major retailers. Another big-box retailer that has pushed back on the giant e-tailer's Prime quick-delivery membership program is Target, which owns the Shipt last-mile delivery service for grocery and other goods.

Walmart’s plan now appears prescient, as Amazon has passed Walmart as the biggest retailer outside China. Amazon’s estimated sales for the 12 months ending in June topped $610 billion, fueled by a surge in e-shopping during the coronavirus pandemic, while Walmart on Aug. 17 reported sales of $566 billion for the 12 months ending in July, according to the New York Times.

Three years ago, Bentonville, Arkansas-based Walmart launched same-day delivery and said it offers over 160,000 products from more than 3,000 of its stores, reaching almost 70% of the U.S. population. While impressive, that’s far behind Amazon’s logistical reach, including last-mile stations such as those under construction in Napa and proposed for Sonoma, and that of couriers such as UPS and FedEx, according to the Washington Post.

Walmart GoLocal is billed as a combination of high technology and a network of drivers to pick up and deliver orders of various sizes. The tech side would allow existing businesses to interlink with Walmart’s online ordering system. Walmart drivers would be dispatched, pick up the order and deliver it. Walmart said these delivery drivers would be either existing employees or gig workers hired via the retailer’s Spark Driver program, or perhaps use drones and self-driving vehicles, according to the Post.

For Terry Garrett, a board member of the Sonoma County GoLocal network that promotes patronage of nearby merchants, the news about Walmart GoLocal was the last thing he expected.

“Walmart is not going to discriminate if a seller is locally owned,” Garrett said. That’s one of the requirements for members of the North Bay network, which was part of campaigns with mixed success on blocking additional Walmart, Safeway, Lowe’s and other national chain stores in the region.

That said, Sonoma County Go Local’s effort four years ago to build a North Bay e-commerce portal underscored the challenge to do so, Garrett said. A pilot project with G&G Supermarket in Santa Rosa was about the launch with 1,500 of its tens of thousands of stock-keeping units, or SKUs, but that ended with the store’s sale to Safeway.

And at the time, inventory and sales management software tools for small merchants that could share up-to-date information with such a portal weren’t as ubiquitous as they are now, so that may be a project the network revisits, Garrett said.

Many factors would go into the decision-making of whether shop owners want to team up with Walmart for delivery service, North Bay retailers contend.

After all, Walmart — a retail behemoth that dominates the U.S. landscape — has been around the block a few times and knows how to capture market share.

For some small shop owners, partnering with a longtime competitor operating with a stacked deck appears hard to imagine.

“Walmart is not our friend,” said Elaine Petrocelli, who owns Book Passage in Corte Madera. “I’ve been relieved they’re not in my neighborhood.”

That said, Petrocelli respects good business acumen and admitted the “last-mile” delivery concept for small companies wanting to farm out their distribution channel to an experienced provider sounds “intriguing” at best.

But maybe the intrigue is not enough to justify sleeping with the enemy.

“You know everybody who says they want to help small business is really helping themselves,” she said.

Bookstores like Book Passage upped its online presence during the height of the pandemic, relying much on customer orders generated from the website.

Other types of retail outlets across the North Bay followed suit.

Village Child owner Rich, who is also a board member on the Downtown Novato Business Association, agreed Walmart has many resources to pull off a venture that could involve so many other retailers. But it’s an unknown whether those shop owners would consider a partnership with the retail giant the right business move.

For her Marin County children’s clothing boutique store, she mails out about 1,000 orders a month by using the U.S. Postal Service.

“It has worked for us. We have a well-established online business. I do think Walmart has a powerful sales channel. There is an advantage to using their reach,” she said. “But it would have to have a cost advantage.”

In the meantime, she said the Village Child has experienced an increase in foot traffic over the last few months — a welcome sign for retailers clawing out of a pandemic.

In Rohnert Park, Jean and Steve Elliott — who run the Fundemonium toy store — have concentrated hard on their local market.

The toy store has a website that serves as a tease, but the main shopping happens in the store, where the inventory of about any toy or game imaginable blankets the store.

“It gives them a good taste of what we have,” she said.

Expansion into other regions, regardless of signing on to a delivery network, is not necessarily the name of the game for Fundemonium.

“Even if we have someone who wants something from Walnut Creek, we’ll still tell them to find their local toy store in Walnut Creek,” she said.

“What we want are relationships with customers,” she said, referring to repeat, centralized business close to the store.

Susan Wood covers law, cannabis, production, biotech, energy, transportation, agriculture as well as banking and finance. For 25 years, Susan has worked for a variety of publications including the North County Times, now a part of the Union Tribune in San Diego County, along with the Tahoe Daily Tribune and Lake Tahoe News. She graduated from Fullerton College. Reach her at 530-545-8662 or susan.wood@busjrnl.com

Jeff Quackenbush covers wine, construction and real estate. Before the Business Journal, he wrote for Bay City News Service in San Francisco. He has a degree from Walla Walla University. Reach him at jquackenbush@busjrnl.com or 707-521-4256.