Bernstein breaks down the battle for e-grocery delivery

Investing.com -- Bernstein says the race for dominance in U.S. same-day grocery delivery is intensifying, with Amazon’s expanded perishable offering adding pressure to an already competitive market.

In a recent report the brokerage said Walmart’s scale and store footprint give it a structural advantage, allowing it to reach 93% of the U.S. population within three hours.

While Walmart’s same-day operation is costlier than third-party (3P) platforms because it uses its own staff for in-store fulfillment, Bernstein estimated that only about 20% of that labor cost is incremental, putting its effective fulfillment and delivery cost at $13–$19 per $75 order, still high, but closer to 3P operators such as Instacart, DoorDash and Uber Eats.

The brokerage noted that Walmart is likely to use same-day delivery as a loss leader to drive Walmart+ memberships and boost its retail media business, which it projects could become a $10 billion U.S. operation by 2030.

Amazon, meanwhile, is cutting its free delivery threshold for Prime members to $25, adding perishables but keeping the service separate from Whole Foods and Fresh, which Bernstein said could create some consumer confusion.

Instacart, DoorDash and Uber are leaning on their 3P models to offer broad retailer selection, fast delivery, with Instacart reporting that 80% of its orders are on-demand, and growing subscription benefits.

Bernstein estimated Instacart’s base shopper earnings at about $9 per order before tips, making it more cost-efficient than Walmart on a pure labor basis.

However, 3P platforms face challenges such as product mark-ups and imperfect inventory visibility.

Bernstein rates Walmart, Amazon, Instacart, DoorDash and Uber all “outperform,” citing room for online grocery penetration to grow and opportunities for retail media to support profitability across both integrated and 3P delivery models.

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