Eli Blumenthal

USA TODAY

Walmart is expanding its grocery business and going after online retailer Amazon in the process.

The retail giant announced Friday that it will be partnering with ride-hailing services Uber, Lyft and delivery startup Deliv to test same-day grocery deliveries. Walmart has been expanding its online grocery business in recent years, letting customers order online and then simply pick their orders up at a nearby store.

Under this pilot program Walmart will be expanding into what's known as "the last mile," or delivery from the store to a customer's home.

Walmart has been delivering in San Jose and Denver for the past few years, offering same-day delivery through a Walmart grocery truck. The company began testing grocery deliveries to business customers in Miami earlier this year through a partnership between its Sam's Club brand and Deliv. The Uber and Lyft deliveries will be coming to Denver and Phoenix in the next two weeks, offering direct delivery from stores to customers. Uber will be handling deliveries in Phoenix, while Lyft will be covering Denver.

In addition to opening up new cities for deliveries, Walmart will also be expanding its grocery pickup service to 14 new markets this month. By the end of July the service will be in more than 60 markets, more than triple the 20 markets the company started with in April.

Similar to Amazon's Prime Now, a customer orders items online and chooses a two-hour delivery window. Walmart employees then gather the items on the list and request a driver from one of the services to come and pick them up. Current items offered range from fresh produce and meat to bakery items, baby food, cosmetics, batteries, diapers or pet food. The company says 40,000 items are available, 30,000 of them food-related and 10,000 more general merchandise items.

Walmart is taking its groceries upscale

Walmart's online grocery service applies only to orders of at least $30, with delivery costing $7 to $10 more. As Walmart is handling the delivery arrangement, customers do not need to pay the Uber or Lyft driver separately.

Amazon's Prime now, by comparison, requires a $15 minimum order and includes free delivery but it's necessary to be a member of the company's $99 annual Prime service.

"We’re thrilled about the possibility of delivering new, convenient options to our customers, and about working with some transformative companies in this test," said Michael Bender, chief operations officer of Walmart's Global eCommerce division. "We’ll start small and let our customers guide us."

The same-day delivery market has ballooned in recent years, with an increasing number of retailers offering the option. The market for the service is expected to reach over $987 million by 2019, according to data released late last year by research firm Technavio.

While not the first to offer same-day delivery — many have credited Amazon with helping bring the option mainstream — Walmart's expansion will likely only improve upon delivery options.

"I think what this is just showing (is that) Amazon has completely changed the landscape of retail and Amazon almost single-handedly has made same-day the new standard," says Daphne Carmeli, CEO of Deliv. It is also provider of same-day delivery services to Best Buy, Macy's, Kohl's, Foot Locker, 1-800-Flowers.com and Google's Shopping Express, among others.

"They did it with Prime. There's not a retailer out there that doesn't have a two-day option, and now there's not going to be a retailer out there that's not going to have an option to get things today. ... Walmart is the largest retailer in the world, and (their entrance is) once again saying, same-day is becoming the new standard."

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