Walmart has announced a reduction in the costs associated with its store-to-home last-mile delivery operations. This development is attributed to the expansion of its online customer base and an increase in order volume from its stores. In the fourth quarter, sales from store-fulfilled deliveries saw a 50% increase, with the company achieving a monthly run rate of $2 billion in this category, as reported by CFO Rainey. Rainey highlighted that delivery services have played a crucial role in attracting upper-income households and have been effective in acquiring members for Walmart+, the company’s subscription service.
To further reduce delivery costs and increase efficiency, Walmart has enhanced its delivery volume from its extensive network of physical stores and improved the order distribution process. Part of these efforts included the introduction of parcel stations in its stores last year, aimed at boosting last-mile delivery efficiency. These stations act as hubs where packages from Walmart’s fulfillment centers are collected before being delivered to customers’ homes either by independent contractors on the Spark Driver platform or through third-party carriers.
Jennifer McKeehan, SVP of transportation and delivery for Walmart U.S., explained in a company blog post that parcel stations allow customers to place online orders for a wider range of merchandise with Next Day Delivery options. Additionally, these stations simplify and streamline the process of distributing online orders from stores for associates.
Moreover, Walmart is investing in automation within its fulfillment and distribution centers to further enhance efficiency and improve the economics of its delivery operations. Rainey disclosed in a recent investor call that the company has implemented advanced automation technology in five of its 31 fulfillment centers. This technology doubles both the capacity and throughput of these centers compared to traditional facilities, significantly benefiting the company’s efficiency in delivering packages to customers.
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