How Walmart will execute next-day delivery for customers

Walmart announced this week it’s offering free next-day delivery to customers — but none of the items ordered will come from one of the company’s 4,700 U.S. locations.

Instead, the items ordered off the website will come from one of the six fulfillment centers that’s located closest to the customer. Marc Lore, CEO of Walmart e-commerce, told Business Insider that having items ship from one of the six centers is cheaper and more efficient than boxing the products from stores or distribution centers.

"Most of the picking capacity in the store is being utilized for same-day pickup and same-day delivery," Lore told the site.

Lore added that fulfillment centers are more equipped to implement automation and boxing technology. He said Walmart plans to “aggressively” invest in the technology to drive down delivery costs.

The only downside — next-day delivery will only be available for certain items on its website.

Walmart said in a news release on Tuesday that next-day delivery would not cost the company more money.

“We can offer fast, convenient shipping options because we’ve built a network of fulfillment assets that are strategically located across the U.S.,” the retail giant said. “We’ve also done extensive work to ensure we have the right products in the right fulfillment centers based on where customers are located and what they’re ordering.”

Walmart's recent delivery move rivals its biggest e-commerce competitor Amazon, which offers free one-day and two-day delivery on items to Prime members. The retail giant, however, is becoming a growing threat to Jeff Bezos' company.

Walmart released its Q1 FY20 earnings on Thursday, with total revenue at $123.9 billion, an increase of $1.2 billion. The company’s e-commerce sales also grew by 37 percent, indicating there's "strong growth in online grocery, as well as the Home and Fashion categories on Walmart.com."

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The company also said its biggest leverage against Amazon is the number of stores it has that are easily accessible for 90 percent of Americans.

“NextDay delivery is a great complement to our same-day Grocery Pickup and Delivery options, and free two-day shipping on millions of items,” the company said. “With the combination of these choices, we’re making every day easier for busy families.”

“And, with 90 percent of Americans living within 10 miles of a Walmart store, we’re well positioned to offer even faster delivery to customers in the future,” Walmart added.