Walmart launches fulfillment centers dedicated to online orders

Walmart launches fulfillment centers dedicated to online orders

Summary: The centers are in Texas and Pennsylvania and designed to speed up delivery times for Walmart's e-commerce business, which will top $10 billion in sales this fiscal year.

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TOPICS: E-Commerce, Amazon, CXO
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Walmart on Tuesday said it has added two large fulfillment centers focused on online orders and e-commerce. Walmart's e-commerce business is expected to deliver sales of more than $10 billion this fiscal year.

The moves come as Walmart aims to fend off Amazon and use its distribution network and touch points with the customer as a weapon. Walmart has been using its stores to ship online orders to consumers and now fulfills more than 10 percent of the orders on Walmart.com that way.

wmt distribution center

However, analysts have said using stores as distribution centers---an experiment Best Buy is conducting too---is tricky due to inventory visibility.

Related: Best Buy: Can stores be asset vs. Amazon?Wal-Mart's Q2: 16 technology, operations and e-commerce takeaways | In Chicago, retailers put the hard sell on each other

Walmart's two fulfillment centers for online orders will be in Texas and Pennsylvania. Walmart has 4,100 stores within five miles of two thirds of the U.S. population and 130 distribution centers.

As brick and mortar retailers get the e-commerce game down, distribution networks and the ability to get goods to a customer's door will be critical. Amazon's expansion has given it the ability to duel retailers directly on many fronts with goods that arrive quickly.

Walmart has more than doubled its selection on Walmart.com and launched a marketplace to offer more goods. Walmart said it has improved delivery speeds by 15 percent while cutting costs by 10 percent. The company has deployed algorithms to determine the best shipping node based on item and customer location.

On the e-commerce front, Walmart is playing from behind to Amazon. For context, Walmart's global e-commerce has annual sales of more than $10 billion. Walmart is projected to deliver sales of $481 billion for the fiscal year ending Jan. 30. Amazon is projected to have sales of $74.4 billion for 2013. 

Topics: E-Commerce, Amazon, CXO

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