Costco Wholesale Corporation (NASDAQ:COST), Wal-Mart Stores, Inc. (NYSE:WMT), Office Depot Inc (NASDAQ:ODP) React to Failed Merger

Costco Wholesale Corporation (NASDAQ:COST) and Wal-Mart Stores, Inc. (NYSE:WMT) are attempting to capitalize on the failed merger of Staples, Inc. (NASDAQ:SPLS) and Office Depot Inc (NASDAQ:ODP). The contest is for the U.S. office supplies market and it has spilled over to groceries. The latest competition is hinged on faster and efficient delivery services.

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Costco with two-hour delivery in San Diego

Costco is partnering with delivery company Instachart to offer two-hour, same-day delivery service to residents of San Diego. The Costco-Instachart collaboration will initially focus on delivery of groceries to small businesses in San Diego such as local restaurants. Later, the delivery service will expand to include shipping of office supplies.

The two-hour, same-day delivery service will cost $5.99 for orders above $35.

It turns out that the reason Costco has chosen San Diego to pilot its quick delivery service is that residents there are tech-savvy and they are also short of time. Though analysts say that what Costco has begun with Instachart won’t be a game-changer, it signals Costco’s willingness to become more active in the omni-channel retail space.

Wal-Mart rolls out next-day delivery

On its part, WMT’s Sam’s Club division is also going after the rivals’ market share with a quick delivery service. Sam’s Club has introduced next-day delivery service in Miami, Dallas and Tulsa. In Dallas, Sam’s Club is using in-house delivery system to get office supplies to small businesses. In Miami, the retailer has partnered with Delvi, a rival of Instachart. Wal-Mart is using Instachart service for Tulsa deliveries.

The disruptions in rivals’ businesses following the failed merger has created an opportunity for Costco and Wal-Mart to expand their market share. The two retailers seem to have several tricks up their sleeves, but they are first trying to curry favor with small business customers through quick delivery before they unleash more of their competitive tricks.

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