The pace of change is fast. It always has been.
And perhaps we’re alone here, but that change has felt particularly fast of late. 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. 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. And we’ve changed too.
Over the last two years, we’ve been working hard to make delivery even faster for Walmart customers – shrinking the distance, and increasing the convenience, in the latest frontier: last-mile delivery. And we’re not just doing it. We’re doing it fast.
We’re redefining last-mile delivery by leveraging our stores as fulfillment centers and utilizing cutting-edge tech to take the guesswork out of deliveries, to reduce emissions, to make our supply chain network more efficient and to ultimately serve our customers in totally new ways.
At the heart of our last-mile strategy is our stores. With 4,700 Walmart stores across the country, located within just 10 miles of 90% of the U.S. population, we’re in the unique position to make these brick-and-mortar locations invaluable parts of our supply chain. And so, we have. 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. The purchase always ends at their homes.
With stores playing so many special roles, from pickup and delivery hubs to testing grounds for the latest technology, our stores couldn’t keep operating like they always had. Our continuous drive to innovate has led us to increase pickup and delivery capacity by 20% last year, and we have plans to do so by another 35% this year. And as we continue to enhance store operations, it’s clearer than ever why our massive store footprint is the quiet, even unexpected, advantage to driving change.
Not only are our stores located all over the country, but they’re also evolving alongside customers. In the last year alone, we increased the number of orders coming from our stores by 170%, which has led us to the next phase of store integration and evolution: Market Fulfillment Centers (MFC).
Fulfilling customer desires
These MFCs are poised to serve as automated fulfillment centers that are located within a Walmart store. An MFC's inventory is separate from the store’s, allowing us to continue enhancing our service for both online and in-store customers. Both stores and MFCs are additional nodes in a deeply complex supply chain. The lengthening of that supply chain means quicker delivery. 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.
If the store is the heart of our strategy, then our delivery network is its hands and feet.
Unlike some of our competitors, we are integral parts of our communities – we exist as part of them. And our relationship with our customers, founded on trust, is exactly what’s allowing us to turn our scale into innovation in delivery.
There is perhaps no clearer example of this than the rapid growth and expansion of Walmart InHome, the delivery service that takes items from our aisles straight into customers’ homes. We are scaling this service to 30 million U.S. homes and hiring 3,000 additional associates to captain an entirely electric fleet of delivery vehicles.
And our Spark Driver network, a proprietary delivery platform that connects drivers to opportunities, is also powering Walmart GoLocal, which offers our innovations in last-mile to businesses of all sizes around the country. By offering the same capabilities that have powered our own digital transformation, we’re using our technology to fulfill our original promise to people: Walmart is here to help you live better. Whether that means you need a carton of eggs from one of our stores, or a bespoke candle from your favorite artisan across town, we can help you get it.
The (autonomous) driver’s seat
Not everything delivering for Walmart has a driver’s seat. Drones bring low emissions and high speed to our fleet as they make short work of small deliveries. Not only that, drones create new pathways for our associates, who are trained on totally new tech, developing skills they can carry through their careers.
And autonomous vehicles, which do have a driver's seat, albeit an empty one, can navigate the streets under their own power, delivering items between stores to shorten delivery times, limit out-of-stocks and keep convenience at the center of a Walmart shopping experience.
Changing the game
Each of these innovations by themselves is great for customers. But when you view them all together, you realize how impressive the bigger picture really is here. Why? Because we’re set up for a cycle of success, underpinned by the nationwide store distribution no one else has. Think about it like this:
“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.”
Underpinning our next step into the last mile is technology.
We’ve built a tech platform that powers our last-mile delivery ecosystem. Agnostic to supply and demand, and built around our own marketplace, the platform uses automation and machine learning to turn a near-infinite number of factors into usable data. And as it learns, it keeps getting better.
“Our new platform is doing revolutionary things,” explained 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.”
Using our size, scale and tendency to stay out in front of change, we’re using our stores in new ways and doing something no one else can. As our capabilities grow, the last mile will continue to shrink, moving delivery from days to minutes. And the faster we get, the closer we come to fulfilling our promise to help people everywhere save money and live better.