Walmart Presses Into Stores as Fulfillment Center Strategy
By Sindhu Sundar on January 27, 2021
Walmart is expanding on its theme of using stores as fulfillment centers, with plans to dispatch automated bots.
With its e-commerce business seeing a dramatic increase during the COVID-19 pandemic, Tom Ward, the retailer’s senior vice president of customer product at Walmart U.S., wrote in a post Wednesday that it is “scaling the number of stores that will also serve as local fulfillment centers.”
“Instead of an associate walking the store to fulfill an order from our shelves, automated bots retrieve the items from within the fulfillment center,” he wrote. “The items are then brought to a picking workstation, where the order can be assembled with speed.”
“We’ve always said personal shoppers are the secret to our pickup and delivery success, and that remains true,” he added. “So, while the system retrieves the order for assembly, a personal shopper handpicks fresh items like produce, meat and seafood, and large general merchandise from the sales floor.”
The retailer is also planning to introduce automated pick up points in some stores, to let customers pick up their orders by scanning a code.
These moves have implications in particular for the retailer’s grocery fulfillment capabilities, and marks the steps it is taking to take on competitors in the sector, experts said.
“This is something I expected, because they have to leverage something that will be hard for Amazon to replicate,” said Sayan Chatterjee, professor at the Weatherhead School of Management at Case Western Reserve University.
“And their brick-and-mortar stores are something that, even though Amazon is trying to roll out Amazon Fresh, will be hard for Amazon to match,” he said, referring to Amazon’s grocery store and delivery service.
Walmart’s push to use its stores for fulfillment also tracks with shifting shopping behaviors during the pandemic, which has led to increasing demand for other alternatives, including pick-up options, Chatterjee noted.
“Prior to the pandemic, the holy grail was one day delivery, [which] was kind of what [retailers] were trying to shoot for,” he said. “But something else has happened also, which is curbside pick up. That’s something Amazon simply will not be able to match, because they just do not have the same kind of physical infrastructure.”
Traditional retailers who have sought to adapt to e-commerce in recent decades have long sought to use their physical stores for fulfillment in some way, but the process can be inefficient, some experts said.
As customers make their way through shelves, they may move or pick up items in ways that can make the location and quantity of inventory difficult to to gauge, said Hart Posen, professor at the University of Wisconsin school of business.
“It leads to lots of mistakes and errors because what the computer system says is on the shelf might not be there, because a customer has it in their cart, or…picked it up and moved it someplace else,” he said. “So mostly using store shelves for e-commerce fulfillment is not a scalable and efficient way to do it.”
But Walmart’s automation approach appears to factor in those considerations, he noted, as the retailer tries to capitalize on its proximity to customers and digital demand.
“The [stores] will be automated, efficient, they’ll be smaller scale than an Amazon distribution center, but they’ll be very close to customers,” Posen said.