Walmart is building a new consolidation centre in Colton, California

An automated site

In July 2019, Walmart will open a new high-tech consolidation centre.  The centre will be 340,000 sq. ft, and will utilise automated technology to receive, sort and ship freight.  It is expected that the new facility will be able to process three times more volume than other consolidation centres, and it will be the most efficient consolidation centre in Walmart’s supply chain.  

Source: Walmart

Part of the broader strategy

This investment is in addition to the new high-tech distribution centre that was announced last year, and shows a continued investment in supply chain by the retailer.  The technology at the consolidation centre will allow Walmart to scan and count products on arrival, which will enable it to promptly address any inaccuracies in orders.

By receiving of a higher volume of goods, the aspiration is to make regional distribution centres more efficient. Geno Bell, senior director of the consolidation centre network said “With this new technology, we can be surgical and responsive in getting merchandise into stores.”

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Walmart is partnering with Udelv to test its autonomous delivery vans in Surprise, Arizona.

Builds on existing driverless deliveries

The pilot will see a cargo van customised to support Walmart’s grocery delivery operation. The test builds on existing self-driving car pilots which are underway. These include a pilot program with Ford, and its delivery partner Postmates, and a similar program with Waymo, Google’s self-driving project. These pilots will help the retailer to better understand the future of delivery and the role of these vehicles as part of a broader mix of fulfillment options.

Source: IGD Research. Udelv’s delivery van being showcased at CES, Las Vegas.

Delivery option expanded to over 100 metro markets

Online grocery delivery is becoming a key part of the mix at Walmart. Having prioritised the roll-out of grocery pickup over the last few years, with over 2,000 stores now offering this service, the retailer has pushed ahead with expanding its delivery network. By the end of the current financial year, over 800 stores across 100 metro areas will offer this service. Walmart has worked with a range of delivery partners to grow this service, which is expected to double in size next this year. The retailer is also testing its own crowd-sourced delivery program, Spark Delivery.

Focusing on efficient fulfillment

This is one of several pilots that Walmart has underway related to online grocery fulfilment. Recently, it started to test to robotic picking technology at a Supercenter in New Hampshire. It uses robots to pick items for grocery pickup from a high-density storage system, operating around 10 times faster than its current manual picking system. It is also piloting an automated dispensing system in Sherman, Texas, enabling the store to double the capacity of orders it can fulfill for grocery pickup.

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As part of their strategic relationship, Walmart and Rakuten have opened their first ecommerce store in Japan. We look at the model being used and implications for future expansion.

Products fulfilled from US inventory

Earlier this year, Walmart and Tokyo-based Rakuten, announced a strategic alliance designed to optimise each company’s strengths and assets to expand their reach to new consumer groups. The Walmart Rakuten Ichiba Store is featured within Rakuten Ichiba, the largest ecommerce store in Japan. The new store provides Japanese consumers with access to products sourced from Walmart’s US ranges. Categories featured include clothing, outdoor goods and toys, with around 1,200 items initially offered. Orders are fulfilled in the US and flown to consumers in Japan. The product price incorporates shipping, duties and taxes.

Source: Rakuten

New online grocery service

A key element of the strategic partnership was the development of a new online grocery delivery service, Rakuten Seiyu Netsuper. This launched in October, offering a more convenient shopping experience that meets the changing needs of customers in Japan. In addition to offering deliveries from Walmart’s stores, the service has established a dedicated fulfillment centre to increase capacity. Both these new services help Walmart to expand its grocery footprint in Japan, a country where its stores numbers have been relatively static for several years.

Adding new eBooks capability to the ecosystem

In addition, Walmart and Rakuten Kobo Inc. have formed an exclusive retail alliance that enables Walmart to sell eBooks and audiobooks and Rakuten Kobo eReaders, in Walmart stores and online at Walmart.com. As one of the country’s largest booksellers, a digital platform enhances its appeal, while also pitching it directly against Amazon and its Kindle e-reader.

A model for future international ecommerce expansion

Although Walmart has operated in Japan since 2002, the Walmart Rakuten Ichiba Store is a model which could be replicated in other countries where it does not have a physical presence. In Japan, Walmart benefits from an established customer base, but trades under the Seiyu brand. Physical stores are not essential to this model. Key elements are a strategic partnership with an ecommerce marketplace leader and a logistics infrastructure to support home delivery.

As orders are being fulfilled from the US, there is limited infrastructure development required in the new country of operation. With Walmart having high brand recognition globally and a reputation for price leadership, there is likely to be strong demand for its products. Walmart has established similar stores in China through its partnership with JD.com.