Walmart pushes new delivery services for a post-pandemic world

Walmart Inc. wants to keep the e-commerce party going.

The retail giant is focused on adding new ways to offer shoppers home delivery and efficiently move online inventory as the pandemic-related e-commerce surge shows signs of cooling.

Walmart is building more automated fulfillment centers attached to existing stores, experimenting with autonomous trucks, using its own workers to make deliveries and expand a service where staffers leave packages inside homes.

Executives aim to keep the retailer growing as a host of competitors—from Amazon.com Inc. to tiny but well-funded startups—speed up delivery times and compete for shoppers.

"When customers realize they need an item, do they think of Walmart first?" said Tom Ward, a longtime Walmart executive who was recently named the head of its U.S. e-commerce operations. "The reason they do or they should is we built these things."

WALMART CONTINUES TO TEMPORARILY CLOSE, SHORTEN STORE HOURS AS OMICRON VARIANT SPREADS

E-commerce sales surged during the pandemic as people avoided shopping in physical stores and clamored for hard to find items such as toilet paper and home goods. But growth has slowed in recent months as shoppers increasingly return to physical stores. Amazon, the country’s largest online retailer, said sales for its online stores fell 1% in the most recent quarter, compared with the same period last year. Walmart said U.S. e-commerce sales rose 1% year-over-year in the quarter ended Jan. 28, down from 69% growth in the same quarter last year.

When the pandemic hit, Walmart accelerated some of its plans to grow online, executives said in interviews last week. "There was a plan, an investment plan, a growth plan, but Covid kind of changed the pace of that," said Chris Nicholas, chief operating officer of Walmart U.S.

In 2020, Walmart rolled out a two-hour home delivery service it dubbed Express Delivery. Pre-pandemic it already offered delivery in pre-schedules slots, usually a day or two away from the time an order was placed. Third-party companies such as DoorDash Inc. make many of these deliveries for Walmart. Last year Wamart increased its delivery capacity by almost 20% and plans to increase by about 35% this year, said a spokeswoman.

Express Delivery is available from more than 3,400 of Walmart’s 4,700 U.S. stores for an additional $10 fee. Walmart executives see it as a helpful service when something is needed fast, not the primary way people stock up on groceries. Walmart declined to say how many people had used the service.

WALMART SPARKS PUBLIC OUTCRY IN CHINA OVER PRODUCTS FROM XINJIANG

Walmart also shifted gears early in the pandemic by using thousands of stores as e-commerce fulfillment hubs to speed up delivery times. Previously, Walmart had favored using warehouses to fulfill most e-commerce orders.

Now Walmart wants to build a bigger, more flexible network and make the delivery system a product that can be sold as a service to smaller retailers, executives said in interviews.

The effort started when executives mapped out a plan to reformat the retailer’s back end technology to enable growth through the online pickup service, then delivery, said Srini Venkatesan, recently named head of Walmart’s omni-channel tech efforts. The pandemic sped things along, but "this is something we have been thinking about for three or four years," he said.

Walmart is building around 100 automated small fulfillment centers attached to existing stores in the next few years, the executives said. Those systems store and move the mostly commonly purchased items online with a system of mechanical shuttles moving along scaffolded tracks, batching orders together for pickup. That helps Walmart fulfill more orders, faster to meet demand, without clogging store aisles with workers picking online orders, said the executives.

Walmart is also building out a service dubbed Spark that lets contract workers shop for or deliver an online order, similar to the Instacart model. Walmart hopes it can use that service to offer delivery even during demand spikes such as those during the pandemic, executives said.

Some ideas are less advanced. It’s testing autonomous delivery vans that shuffle products short distances on two routes, one near Walmart’s headquarters in Bentonville, Ark., and another in New Orleans.

WALMART CUTS PAID LEAVE IN HALF FOR COVID-POSITIVE WORKERS

The autonomous vehicles travel a short distance between a small grocery warehouse and a store where orders are picked up by shoppers or by delivery workers. The vans take a circuitous route using only right turns to avoid the relative risk of crossing traffic with a left turn, according to a recent observation of the van. The vehicles are programmed to travel slightly slower than the flow of traffic.

A key piece of Walmart’s plan is a service that brings orders inside a shopper’s home or refrigerator called In-Home Delivery. The service will be available to around 30 million homes by the end of this year for members paying $148 annually.

The workers who make deliveries are part of a small team that become familiar to customers, said Walmart executives, have been with Walmart for at least a year, undergo a background check and wear body cameras during deliveries. The delivery workers will also pick up returns at homes.

CLICK HERE TO READ MORE ON FOX BUSINESS 

Shoppers gravitate to the service because it has a higher level of personalization than regular delivery, not necessarily because they want their orders put inside their refrigerators when they aren’t home, said Mr. Ward, the e-commerce head.

"You know the people" making deliveries, said Michelle Gill, who lives in Rogers, Ark., and switched to mainly using In-Home delivery about a year ago. During a recent delivery, Ms. Gill and her family were outside when the driver arrived and dropped off items into blue bags near the front door. Ms. Gill said she also likes that she doesn’t need to think about tipping drivers as it’s baked into the membership.

GET FOX BUSINESS ON THE GO BY CLICKING HERE  

To help offset the cost of home delivery, Walmart started selling delivery as a service to other companies last year, Mr. Ward said. Walmart introduced what it calls Walmart GoLocal, which now delivers goods for Home Depot Inc., and a handful of small retailers.

Combined, the recent warehouse and delivery efforts will help Walmart eventually provide delivery in minutes, Mr. Ward said. Delivery in "two days is kind of an e-commerce parity these days," he said. "One day is pretty cool, same-day day is really impressive and sub-same day is even more impressive."