Walmart.com now sells meal kits (WMT)

BI Intelligence

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Walmart began selling meal kits on Walmart.com earlier this week, and there are now a number of available options from two different brands, Home Chef and Takeout Kit, according to TheStreet. The new offerings appear to be popular, as some meal kits are reportedly already sold out.

The participating meal kit brands are still responsible for the fulfillment of each order, but Walmart receives a referral fee and commission, a source told TheStreet. Meal kits are available for various cuisines, generally serve two or four people, and range from $32 to $79.60 in price.

For the meal kit brands, Walmart provides an opportunity for greater exposure.Walmart.com gives Home Chef and Takeout Kit, as well as any other brands that enter the marketplace in the future, access to a huge consumer base that they can't replicate on their own. Only 16% of US consumers subscribe to a meal kit service, and both brands offer such subscription plans. Exposing Walmart.com shoppers to these companies' meal kits may lead to increased sign ups for a full subscription if they can get more consumers to give their meal kits a try.

Walmart is likely looking to maintain its lead in US grocery by getting into the $2 billionmeal kit industry. Walmart relies heavily on its grocery business, as it accounts for 56% of the company's sales and is one of its biggest drivers of online growth. In order to ensure its continued grocery success, Walmart has built out its omnichannel grocery and delivery options, invented new foods, and is now looking to the meal kit space. The retailer could even look to purchase a meal kit brand as Albertsons has done with Plated, or start its own, in order to fully invest in the industry.

The retail giant is in a unique position to combat meal kit subscriptions’ biggest obstacle, price. The No. 1 reason US consumers gave for not subscribing to meal kit services is that they're too expensive. Walmart has a reputation for offering low prices, so if it can effectively leverage that persona, it may be able to get its consumers to give meal kits a try, even for a one-off rather than a subscription. If Walmart can lower prices and convince consumers that meal kits are worth it, Walmart could become a major player in the industry.

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