Wal-Mart Beefs Up Online Fulfillment Network

Two new fulfillment centers dedicated to filling Wal-Mart’s online orders will bring more than 600 new full-time jobs to Texas and Pennsylvania, the retail giant announced early Tuesday morning (Oct. 1.)

These two new online fulfillment centers are part of a next-generation fulfillment network that will deliver U.S. customer orders faster and at a lower cost, Wal-Mart noted in the release.

Analysts applaud the move as the brick and mortar giant seeks to compete head-to-head with Amazon, eBay and other omni-channel retailers.

Carol Spieckerman, CEO of New Market Builders, has said Wal-Mart started to see its brick and mortar presence as an asset sometime early last year and they have continued to leverage those physical boxes and expansive logistics network to their advantage.

The testing of lockers in larger cities and now the opening of two dedicated online fulfillment centers will help to give Walmart.com more leverage to deliver online orders quickly without hefty freight charges, or even an annual membership rate like Amazon Prime. Walmart officials said the two new centers will help facilitate several dozen stores and 130 distribution centers that are already helping to fill online orders as the retailer continues to leverage its expansive transportation network.

“With our dedicated online facilities and 4,100 stores within five miles of two-thirds of the U.S. population, we gain a significant advantage by being positioned in the most important location – close to our customers,” said Joel Anderson, president and CEO of Walmart.com. “This unique combination allows us to get more products to our customers faster and at a lower cost.”

The new center located in Fort Worth, Texas, is 800,000 square feet, and will have 275 full-time positions. It began shipping orders last week, Anderson said. This center is operated by Brentwood, Tenn.-based OHL, a global supply chain management solutions company.

The Bethlehem, Pa., operation will be more than one million square feet and will ultimately employ more than 350 full-time workers. It is scheduled to open in the first quarter of next year and will fully operated by Wal-Mart. Combined, the new operations will house hundreds of thousands of items ranging from electronics, to toys, apparel, fitness equipment, sporting goods and more.

“I want to thank and congratulate Wal-Mart on its decision to expand operations in Texas,” Texas Gov. Rick Perry said. “The decision to locate this new center and help create nearly 300 new jobs in the metroplex is good business for Wal-Mart, good business for Texas, and it serves as further proof our state’s economy is booming and will continue to grow.”

Pennsylvania Gov. Tom Corbett echoed Perry’s response about the excitement surrounding 350 jobs in Lehigh Valley.

“As Wal-Mart moves forward with expansion of its e-commerce business we will be a partner in ensuring Pennsylvania and the Lehigh Valley remain a continued part of that growth,” Corbett said.

Wal-Mart said the new centers will also support online growth and expanded product selection at Walmart.com.

This holiday season customers will have access to more than five million products on Walmart.com, which is more than twice as many as last year. Walmart.com has expanded the site to include items offered through marketplace sellers in addition to its own products.

Wal-Mart said it expects its e-commerce business to top $10 billion globally this year, after experiencing a 30% global growth rate in the recent quarter ending July 31. Walmart.com derives the majority of its online sales from the U.S., Brazil, China and the United Kingdom.

More than 10% of units ordered on Walmart.com are now shipped to a customer’s door from a store, and more than 50% of these orders are delivered in two days or less, Anderson said.

In just the past two years, Walmart.com has sped up delivery by 15% while reducing overall costs by 10% by optimizing the way orders are shipped using Walmart’s different physical locations. Part of this optimization is enabled by algorithms developed by @WalmartLabs that determine the best shipping node based on the customer location and items ordered. The new centers will provide even faster delivery while further reducing costs.