Jun 3, 2022 - Economy

Walmart bulks up automation to compete against Amazon

an animated GIF of a robot making a box with the Walmart logo on it

A machine in a Walmart fulfillment center making a box. (Video: Walmart)

Walmart plans to open four new fulfillment centers that rely heavily on automation by 2024, the company announced today.

Why it matters: Where Amazon has excelled, Walmart is investing heavily to catch up as its own e-commerce business has grown.

Details: Walmart's upcoming fulfillment centers (where online orders are packed and shipped) will be the first of their kind for the company — given their combination of robotics, machine learning and people.

  • The retailer said it's working with Knapp, an international logistics provider, to not only largely automate what was a 12-step manual process into five steps, but also to double the number of orders a facility can fulfill in a day.
  • Part of the efficiency gained also means workers will no longer need to walk nine miles or more a day across a facility because products will be shuttled to them instead, the company says.

What they're saying: "[T]hese four next generation [fulfillment centers] alone could provide 75% of the U.S. population with next- or two-day shipping on millions of items," David Guggina, senior vice president of innovation and automation at Walmart U.S., wrote in a blog post.

  • Together with the company's 31 existing dedicated e-commerce fulfillment centers, Walmart says it will be able to reach 95% of the U.S. population with next- or two-day shipping.
  • And when taking into account its roughly 4,700 stores, Walmart says it could offer same-day delivery to 80% of the U.S. population.

In contrast: Amazon had 253 fulfillment centers, 110 sortation centers, and 467 delivery stations in North America, not to mention hundreds of thousands of drivers and over 100 Amazon Air cargo aircraft, as of the end of 2021.

The big picture: Both Amazon and Walmart have been spending to bulk up where the other has had the upper hand.

  • While Walmart's spending billions on logistics and automation, Amazon's been spending billions to open new physical stores, particularly for groceries (where Walmart dominates).

Be smart: Online shopping experiences have become almost indistinguishable from one site to the next, so retailers have been battling one another for customer loyalty through free and fast shipping and returns.

What to watch: The new fulfillment centers will be located in Joliet, Illinois; McCordsville, Indiana; Lancaster, Texas; and Greencastle, Pennsylvania — with each planning to hire more than 1,000 new workers.

Go deeper