Walmart Focuses on the Last Mile

The retail giant wants to deliver convenience to its customers, so it’s investing heavily in its delivery services.

March 01, 2022

Walmart Delivery Assembly Line

BENTONVILLE, Ark.—Walmart is making its stores the “heart” of its last-mile strategy, according to a post on its corporate website. The retail giant says its 4,700 stores, which are located within 10 miles of 90% of the U.S. population, are “invaluable parts” of its supply chain.

“In addition to serving customers in person, we serve customers whose journeys to their purchases can begin anywhere. It doesn’t matter where the journey begins,” writes Walmart.

Walmart’s pickup and delivery capacity grew 20% last year, and it plans a 35% increase this year. In 2021, Walmart lifted the number of orders coming from its stores by 170%. That increase leads Walmart to its next phase of store integration and evolution which is its Market Fulfillment Centers (MFC).

These MFCs will be automated fulfillment centers that are located within a Walmart store, but an MFC's inventory is separate from the store’s inventory. According to Walmart, an MFC is a compact, modular warehouse built within, or added to, a store. In addition to fresh and frozen items, MFCs can store thousands of the items. Automated bots retrieve the items from within the fulfillment center, and the items are then brought to a picking workstation, where the order can be assembled.

“Both stores and MFCs are additional nodes in a deeply complex supply chain. The lengthening of that supply chain means quicker delivery,” writes Walmart. “It’s true: We're adding offerings, while shrinking the time between the moment our customers realize they want something and the moment they get it.”

Delivering Convenience

Walmart is also homing in on delivering convenience to its customers.

“We’ve watched in real time as people foundationally changed their shopping habits, spurred not just by a global pandemic, but by the expectation for availability to also mean convenience,” writes Walmart. “That need for convenience led to six times the number of customers using delivery in the fourth quarter compared to pre-pandemic levels, signaling a huge change in how our customers shop.”

Walmart says it’s delivering convenience to customers through its Walmart InHome service, which transports customers’ purchases straight into their kitchen or garage refrigerator, as well as picking up returns. It’s now scaling the service to 30 million U.S. homes, up from six million, and hiring 3,000 additional associates to captain an electric fleet of delivery vehicles.

Walmart GoLocal

Walmart is also using its Spark Driver network, a proprietary delivery platform that connects drivers to opportunities, for Walmart GoLocal, which is a white-label delivery-as-a-service business focused on providing third-party retailers and brands an affordable local delivery solution.

The retailer is also utilizing drones to make small deliveries in select markets and testing autonomous vehicles to deliver items between stores to shorten delivery times, limit out-of-stocks and “keep convenience at the center of a Walmart shopping experience.”

“As we continue to create new delivery options for customers and members, and new capabilities for Walmart GoLocal clients, we add density to the last mile,” said Tom Ward, chief eCommerce officer, Walmart U.S. “With more density comes more opportunities for drivers, and more opportunities result in increased speed. This means we can get customers and clients their items even faster, all while helping lower costs. It’s a happy cycle.”

Walmart says the next step in its last-mile strategy is technology, and it’s built a tech platform that powers its last-mile delivery ecosystem. Agnostic to supply and demand and built around Walmart’s marketplace, the platform uses automation and machine learning to turn a “near-infinite” number of factors into usable data.

“Our new platform is doing revolutionary things,” said Srini Venkatesan, the executive vice president for Walmart Global Tech. “With all these points of fulfillment/delivery in a sense ‘communicating’ with one another, we can plan replenishment at a shorter cycle, gain close-to-real-time insights of inventory and ultimately react to customer demand. All of that adds up to a single stellar shopping experience for Walmart customers.”