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Walmart puts more focus on distribution to compete online with Amazon

walmart preps 50 a year shipping service to take on amazon prime
Image used with permission by copyright holder

Detailed by the Wall Street Journal today, retail giant Walmart is attempting to step up the company’s online shopping footprint by increasing the number of online-only, dedicated distribution centers around the country. Looking for ways to compete more effectively with Amazon’s online presence, Walmart global e-commerce CEO Neil Ashe mentioned that the company recently opened a new distribution facility in Fort Worth, Texas and will open a 1-million square foot facility in Pennsylvania before March 2014. That facility is expected to add an additional 350 jobs to the Lehigh Valley area of Pennsylvania. 

Targeting specific regions of the country, this should allow Walmart to ship online orders more quickly to consumers in the Northeast and the Southwest. Ashe indicated that more online-only facilities will be built in other regions of the country as well. Assuming all goes well with expansion plans, Ashe claims that Walmart will be able to compete with Amazon’s speedy delivery times within the next two years. However, Walmart will also need to offer increased product availability to customers as well. In the past, Walmart has relied heavily on the Site-to-Store service when a product wasn’t available in the customer’s region.

Image used with permission by copyright holder

Speaking about the transition from brick and mortar stores to the focus on online sales, Ashe said “Wal-Mart was the Internet before the Internet came along. Value, access, transparency and efficiency are what the Internet asks of companies to survive. And the ethos of our company is very aligned with what customers are asking us to do. We don’t have to change what Wal-Mart is, we just have to ask it to it in a different way.”

Hypothetically, if Walmart is successful at building up a distribution infrastructure that supports quick processing and delivery times, the company could roll out a subscription-based program similar to Amazon Prime. For a monthly or yearly fee, customers could sign up for some form of expedited shipping service. That would give Walmart the advantage of encouraging customers to check first before purchasing an item at another online retailer, a key competitive advantage currently held by Amazon.

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