Walmart, the nation’s largest retailer, strengthened and expanded its distribution network in the third quarter even as rival e-commerce giant Amazon shed its vast industrial base.
The Bentonville, Ark.-based chain, which has 4,616 namesake stores in the U.S. and also owns Sam’s Club, provided an update on supply chain growth when it reported third-quarter results Thursday. provided. The company, whose revenue increased 5.2% to $160.8 billion, said the expansion of its supply chain with new distribution centers and e-commerce fulfillment centers will significantly improve margins and get products to shoppers faster. He said it would be possible. .
Walmart Chief Financial Officer John David Rainey told Wall Street analysts on a conference call that “we will continue to grow our profitability in the coming years by modernizing our supply chain and expanding our high-margin growth strategy.” “We expect the rate to increase.” “During the quarter, we made good progress in both areas. We continue to invest capital in building technology and optimizing our next-generation supply chain, and the benefits of automation and productivity are reaping results. It’s starting to show up.”
walmart, The company, the largest U.S. retailer by revenue, currently operates “nine regional distribution centers serving U.S. stores with varying levels of automation, and six additional centers are currently in the construction phase.” says Rainey.
“More than 15% of our stores now receive product from these facilities, helping us get products to shelves faster and more efficiently,” he said. “During the quarter, we opened our third store. Next generation e-commerce fulfillment center. These 1.5 million square foot facilities more than double storage capacity and allow us to process twice the number of customer orders per day, serving nearly 90% of the U.S. market, including market-bound products. It is expected that next-day and next-day shipping will be expanded. By Walmart Fulfillment Services. ”
Walmart recently debuted a high-tech robotic fulfillment center. 2300 E. Loop Road Located in Lancaster, Texas, near Dallas.Basically Replace small distribution centers Walmart is closing 5300 Westport Parkway Located in Keller, Texas.
retailers, including Walmart; the goal and Macy’s At least partially in response to Amazon’s fast deliveries, the company is not only opening more distribution centers, but also expanding its supply by using its stores as micro-distribution centers to get orders to customers quickly. I’ve been building a chain.Seattle based Amazon, As a digitally native company, we had to strengthen and build an extensive supply chain network from the beginning, making us the largest industrial tenant in North America.
But after dramatically expanding its distribution network over the past few years amid the pandemic, the online retail giant recently opted to reduce its industrial space and adopted a new strategy that contributed to a surge in profits. The company said.
meanwhile At last month’s third quarter financial results briefing, Amazon said moving from a national hub-and-spoke model to a regional delivery network will reduce warehouse space, delivery times and shipping costs nationwide. Amazon said third-quarter sales rose 13% to more than $143 billion and net income rose to just under $10 billion from $2.9 billion a year earlier as customers were able to pick up their online orders faster. .
“both [Walmart and Amazon] “While the company has and will continue to rapidly expand its distribution network for the long term, Amazon expanded even more rapidly during the first two years of the pandemic and has since hit the pause button,” Coster said. said Adrian Ponsen, director of U.S. industry analysis. “Walmart occupies about a third of Amazon’s distribution space in the U.S., but it clearly needs more space and is focusing on modern buildings with high ceilings and dozens of loading docks.” The level of automation and throughput.”
Ponsen said Amazon estimates it has 500 million square feet of U.S. distribution space, while Walmart leases or owns 133 million square feet.
However, Amazon has Pulled from more than 14 million square feet Over the past 16 months, about 3% of U.S. logistics space tracked by CoStar has been spent on cost savings, Ponsen said.
CoStar analysts cautioned that it is difficult to directly compare Walmart and Amazon from a distribution perspective because they are very different businesses.
“Walmart has far more physical retail space than any other retailer in the United States,” Ponsen said. “So we probably don’t have to reach the scale of Amazon in terms of distribution space and we could hold a huge amount of inventory in our stores.”
A year ago, Walmart announced plans for four high-tech fulfillment centers. Not just Texas, which was mentioned Thursday. 3501 Brandon Road, Elwood, Illinois.in 5259 W. 500 N. McCordsville, Indiana.and 1915 Everts Spring Court, Greencastle, Pennsylvania.
During the earnings call, Rainey talked about Walmart’s efforts to build compact, modular warehouses inside or attached to stores that use robotics and artificial intelligence to retrieve orders.
“To support our digital business of store fulfillment, we plan to have seven stores with automated Market Fulfillment Centers (MFCs) operational by the end of this month,” Rainey said. “These MFCs will stock thousands of the most popular items and are expected to increase ordering capacity and productivity while also increasing inventory accuracy, allowing customers to place perfect orders. I can deliver it.”
With all the advancements, Walmart has “cut its store-to-home delivery costs by 15%, while improving same-day delivery times in more than 80% of its stores, and in some cases delivering as much as 30 minutes faster.” Laney According to.