Wal-Mart continues to invest in its distribution, e-commerce fulfillment infrastructure

by Kim Souza (ksouza@talkbusiness.net) 660 views 

Wal-Mart Stores has spent more than $2 billion in the past two years building infrastructure for its U.S. eCommerce division. The Bentonville-based retailer is not finished, and recently confirmed two more distributions centers are to be built.

Marc Wulfraat, president of MWPVL International, noted in a recent report that Wal-Mart has plans to open four new distribution facilities that will add another 4.2 million square feet in the near future. Talk Business & Politics has identified three.

The first is a $135 million cross-docking distribution center at the Port of Mobile (Alabama) and a sprawling 1.27 million square foot distribution and fulfillment facility in Bentonville that will serve the retailer’s midwest operations. The retail giant got the go-ahead from Bentonville Planning Commission on Tuesday (April 18) for the new site at 5800 S.W. Regional Airport Blvd., across from the Walmart Distribution Center No. 6094. Talk Business & Politics first reported this large scale project earlier this month. Now the city council must consider the project and give its approval in the next few weeks.

Wal-Mart has denied the Bentonville site will facilitate the retailer’s online business instead saying the facility will “increase our logistics capabilities in this market,” according to Wal-Mart corporate spokeswoman Anne Hatfield. She also said it’s too early to discuss project details.

The cross-docking and storage distribution project in Mobile is further along. Earlier this month Wal-Mart made the announcement in conjunction with state officials for the $135 million port project expected to be completed in the next 14 months. At 2.5 million square-feet, the facility will employ 550 full-time workers and support about 800 Walmart store locations.

“We are excited about how this facility will help us serve customers from Alabama to the Great Lakes and the economic impact it will have through local job creation and future economic development in the Mobile area,” said Jeff Breazeale, vice president of direct import logistics at Wal-Mart.

The new distribution center is expected to increase local port traffic by 10%, generating cargo volume of approximately 50,000 TEUs, or twenty-foot containers. Wal-Mart will get up to $3 million in port credits made available by the state for creating jobs. It is unclear if Wal-Mart will seek Arkansas incentives for the proposed Bentonville expansion.

Wal-Mart’s U.S. distribution network includes 173 distribution centers for Walmart U.S. and Sam’s Clubs with more than 125.8 million square feet under management. Amazon, the nation’s leader in e-commerce, has 241 active distribution facilities with roughly 91.73 million feet under management. The facilities have helped Amazon with two-day free delivery for its Prime Members.

Also on the drawing board for Wal-Mart is a proposed e-commerce distribution center in Aurora, Co., first reported in January. The retailer has been quiet about his project too, but it spent $13.5 million purchasing 169 acres located south of Denver International Airport. If it is an e-commerce fulfillment center it would give the retailer 10. Amazon already has a fulfillment center in the Denver area and recently announced a second site in Aurora for 1 million more square feet.

Walmart U.S. eCommerce CEO Marc Lore recently said the hefty infrastructure investments of the past couple of years is what allowed it to offer two-day free shipping for online orders of $35 or more. While this is “table stakes” for a retailer today, Lore said Wal-Mart’s scale of distribution network allows it to create efficiencies it can then pass along to the customer in lower prices and shipping costs.

Wal-Mart recently nixed plans to build a 1.2 million square-foot distribution center in Merced, Calif., that has languished in limbo since it was first announced in 2005. This was to be general merchandise distribution center that served stores. Wal-Mart said they were abandoning plans for the site given that the retail business has changed.