With a booming e-commerce business, Walmart is bolstering its approach to micro-fulfillment by leveraging its store space for what it calls “Market Fulfillment Centers” (MFCs).
MFCs, formerly known as local fulfillment centers (LFCs), will serve as automated fulfillment facilities inside stores, Walmart said in a blog post this week. The retail giant noted that this model — leveraging more than 4,700 Walmart stores located within 10 miles of 90% of the U.S. population — forms the core of its last mile strategy by expanding its retail chain. sourcing and expediting delivery, among other benefits.
The last mile ecosystem is powered by a technology platform that uses automation and machine learning to turn a “nearly infinite number of factors” into usable data, the Bentonville, Ark.-based retailer said.
“Our new platform is doing revolutionary things,” explained Srini Venkatesan, executive vice president of Walmart Global Tech. “With all of these fulfillment/delivery points ‘talking’ to each other, we can plan replenishment on a shorter cycle, get near real-time inventory information, and ultimately react to customer demand. clients. It all adds up to a unique and exceptional shopping experience for Walmart customers. »
Last year, Walmart increased its pickup and delivery capacity by 20% to meet digital demand, and the company plans to add an additional 35% capacity in 2022. The retailer said that during over the past year, it had increased the number of orders from our stores by 170%, following growth of more than 500% the previous year.
MFCs mark the “next phase of store integration and evolution,” according to TJ Stallbaumer, senior director of digital strategy and brand engagement for Walmart’s corporate affairs.
“With stores playing so many special roles, from pickup and delivery centers to testing grounds for the latest technology, our stores could not continue to operate as they always have,” Stallbaumer wrote in the blog post. “Using our size, our scale and our tendency to stay away from change, we are using our stores in new ways and doing something no one else can. As our capacities increase, the last mile will continue to shrink, taking delivery from days to minutes,” he added.
Using robotic technology and artificial intelligence, MFCs fulfill online orders for pickup and delivery faster, allowing Walmart stores to handle increased digital order volume and provide more convenience to customers. Facilities can store thousands of products, with items ranging from fresh and frozen foods and other consumables to electronics. Automated robots pick up ordered items from the fulfillment center, instead of an associate having to walk around the store to pick products from the shelves. The items are then taken to an order picking station, where the order can be assembled more quickly.
Walmart’s micro-build partners include Alert Innovation, Fabric and Dematic, whose technologies are used to build MFCs inside or attached to stores. Walmart began testing its first micro-execution facility at its Salem, NH, supercenter in late 2019 using Alert automation.
For Walmart’s fourth quarter of fiscal 2022 ended Jan. 31, U.S. e-commerce sales grew 70% year-over-year, fueled in part by customers’ use of delivery which was increased sixfold in the quarter from pre-pandemic levels. Full-year digital sales climbed 11% in fiscal 2022, marking 90% growth on a two-year stack.
The need for last-mile excellence will intensify as Walmart expands its home delivery service, in which groceries ordered online can be delivered directly to customers’ refrigerators. Plans call for the retailer to expand InHome’s reach from 6 million U.S. homes to 30 million homes by the end of 2022. To support that growth, the company said it will add more than 3,000 drivers- associated deliverers this year and would build a fleet of 100% 100% electric delivery vans.
In August, Walmart also launched Walmart GoLocal, a white-label delivery service that offers its e-commerce and logistics capabilities to other businesses, including small and large retailers. Consumers place orders with participating businesses, their e-commerce platforms “ping” the GoLocal platform, and drivers are dispatched for delivery. GoLocal distributes orders to third-party service providers through Walmart’s Spark Driver program, available in over 600 cities. Drivers receive orders through the Spark Driver app and then make deliveries.
“As we continue to build new delivery options for customers and members, and new capabilities for Walmart GoLocal customers, we’re adding density to the last mile,” said Tom Ward, director of e-commerce at Walmart in the United States. “With more density, there are more opportunities for drivers, and more opportunities translate to increased speed. This means we can get customers their items even faster, while helping to reduce costs. . »
Walmart rival Target Corp. has also adopted a similar fulfillment strategy, which the Minneapolis-based retailer calls “stores as hubs.” In the omnichannel model, stores position themselves as digital fulfillment sites as well as showrooms and service centers.
Target has had great success with this approach. More than 95% of its sales in the fourth quarter of fiscal 2021 were made by its stores. Same-day online services – Drive Up (curbside pickup), Order Pickup (store pickup) and Shipt (home delivery) – drove 45% sales growth in 2021 after a 235% gain in 2020. The company also opened two micro-fulfillment “sorting centers” in fiscal 2021. At these sorting facilities, which use technology acquired from Grand Junction and Deliv, personnel from the back office that handles digital orders focuses only on picking and packing. Orders are then routed to the sorting center to be consolidated with various carriers for delivery. Plans call for five more sorting centers in 2022.