Walmart hinted it would add free one-day shipping to counter Amazon - and it reveals a hidden advantage

Sarah Halzack/The Washington Post via Getty Images

Walmart has been beefing up its online-order pick-up options.

• Amazon announced during its quarterly earnings call last Thursday that it has started transitioning its free Prime shipping offering from two days to one.
• Walmart hinted in a snarky tweet on Friday that it would start doing the same thing without a subscription.
• The move would make sense for a few reasons, and it may even be easier for a more traditional retailer like Walmart to pull off.
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Amazon's latest move will likely change the way online shopping is done across the board forever.

Amazon announced during its quarterly earnings call last Thursday that it has started transitioning its free Prime shipping offering from two days to one. The announcement shook the retail industry, from customers to competitors.

Walmart, which has emerged as Amazon's chief rival both online and off, didn't miss a chance to chime in. 

Walmart hinted in a snarky tweet on Friday that it would start doing the same thing without a subscription.

Read more: Walmart fires back at Amazon in a snarky tweet attacking Prime member fees

"One-day free shipping...without a membership fee. Now THAT would be groundbreaking," the tweet reads.

It finishes with a hint of a promise, or, if you're Amazon, a vague threat: "Stay tuned."

Walmart unveiled its free two-day shipping offer to match Prime's two-day shipping in 2017, with the caveat that it's only good for orders totaling more than $35.

Amazon has built up an immense network of fulfillment centers to bring its product closer to customers and ship things out more quickly than ever. Moving that to one-day shipping will no doubt be more costly, as Amazon told analysts on Thursday that in the upcoming quarter it will absorb $800 million in costs related to making one-day shipping a reality for millions of items.

A built-in advantage

But what if instead of operating 75 fulfillment centers and 25 sortation centers across the US, each one of them measuring hundreds of thousands of square feet, Amazon had thousands of smaller ones?

That's pretty much what Walmart already has with its more than 5,000 stores in the US. A stat that Walmart executives like to whip out is that 90% of the US population lives within 10 miles of a Walmart store.

Walmart already uses its stores to fulfill online grocery orders, an initiative that it has been growing. Walmart has opened pickup centers in about 2,000 stores, which is nearly half of its US store fleet. This means that there are pickup centers within 10 miles of 70% of the US population, according to Digiday.

Between 11% and 13% of Walmart customers use its online grocery service, according to an analysis by Cowen & Co.

Most of Walmart's grocery efforts have been for its click-and-collect service, where customers drive to the store and pick their online orders up. Walmart does also have grocery delivery pilots, partnering with Udelv and Ford for deliveries using autonomous vehicles, but those plans are less advanced. 

Walmart also has beefed up its pickup service, investing in giant automated towers, positioned near the front of stores, that customers can interact with to retrieve their online order.

Either way, much of the process is the same: the order comes in, and workers pick the product from the store. Walmart stores are huge, selling 142,000 different items.

Walmart does not yet fulfill online delivery orders through its store, but its closest physical competitor, Target, does.

Target also offers same-day delivery through Instacart rival Shipt, a company it purchased for $550 million in 2017.

Read more: One stat in Target's earnings proves stores are still the biggest defense against Amazon

"Digital growth at Target isn't coming at the expense of our stores," Target CEO Brian Cornell told investors in a meeting earlier this month. "It's making stores more relevant."

While most of the time legacy retailers seem to be fighting from behind, when it comes to being closer to the customer, they already have that figured out.

"Both Walmart and Target are leading Amazon in terms of these shipping options - they are the ones with the best solutions already in place," John Zolidis, president of Quo Vadis Capital, told Business Insider's Hayley Peterson in a recent interview.

In fact, there's good reason to believe that one-day shipping is simply a stop-gap before the ultimate game changer: free same-day delivery.

Read more: Forget one-day shipping: same-day is the 'real battleground' where Amazon, Walmart, and Target, are sparring

The next step is leveraging this advantage in a way that is both cost-effective and customer-friendly.