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.

• Our forecast expects Walmart Inc.’s ecommerce sales to grow 13.6% this year to $94.38 billion.

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