Walmart’s warehouse automation is key to achieving ecommerce profitability

The insight: Walmart’s automated warehouses are delivering vast efficiency gains, significantly lowering the cost of ecommerce fulfillment.

Zoom in: When automated, Walmart’s distribution centers “see roughly twice the throughput…with half the headcount,” CFO John David Rainey said at the Evercore ISI Consumer and Retail Conference. As a result, the retailer is on track to reach ecommerce profitability within two years.

  • While just 15 of Walmart’s 42 distribution centers—serving roughly 1,700 stores—are currently automated in some way, the retailer expects 55% of its fulfillment center volumes and 65% of its supercenters to be serviced by automation by the end of its fiscal 2026.
  • The extra capacity generated by faster throughput is helping to grow Walmart’s marketplace business by opening up more space for third-party sellers.
  • That’s creating demand for the retailer’s fulfillment services, which over one-quarter (28%) of Walmart merchants now use.

The big takeaway: Automation is key to Walmart’s efforts to grow its ecommerce business, particularly as it looks to compete with Amazon on delivery speed without putting more pressure on its bottom line.

Go further: Check out our report on The Ecommerce Delivery Opportunity.

First Published on Jun 14, 2024