Walmart is getting increasingly serious about how quickly it can get an order to a customer’s doorstep.
The number of units the retail giant delivered in less than 30 minutes has doubled year over year in the current quarter, chief financial officer John David Rainey said in a company earnings call on Thursday. Walmart has now expanded sub-30-minute delivery to 38 U.S. markets, up from an initial launch of 33 markets in May.
The gains follow a second quarter that continued to push the envelope on same-day delivery, with fast delivery in the U.S. including fashion, general merchandise, groceries and medicine growing 48 percent during the quarter.
Despite its slowest total sales growth in six years amid a pullback in consumer spending, Walmart’s online business has remained a bright spot for the Bentonville behemoth in part due to the strong delivery network.
U.S. e-commerce sales increased 24 percent in the May-to-July period, marking the 10th consecutive quarter of growth above 20 percent. Globally, e-commerce sales increased 23 percent—roughly twice the level of five years ago.
That performance is increasingly tied to Walmart’s ability to offer customers speedier fulfillment. Store-fulfilled delivery sales grew more than 40 percent in the quarter, while expedited deliveries of less than three hours represented about 37 percent of store-fulfilled orders.
“The more omni we become, the more important our stores become,” said Rainey in the call. “Between in-store shopping and digital fulfillment, we have more unit volumes transacted through our stores than ever before as they are the last-mile fulfillment nodes for 80 percent of our e-commerce orders and 100 percent of our fast deliveries.”
CEO John Furner said the retailer’s physical footprint and fulfillment infrastructure allow it to put inventory closer to customers while maintaining an “attractive” cost structure.
“Speed is not simply a fulfillment metric; it is an acquisition strategy,” said Furner. “Customers who use fast delivery shop with us more frequently, they deepen engagement with us, and they are more likely to become Walmart+ members.”
According to Furner, Walmart’s stores put inventory and associates within 10 miles of 95 percent of the U.S. population.
That helps explain why Walmart is continuing to pour capital into the infrastructure behind the service. Rainey said the company’s U.S. e-commerce business generated double-digit incremental margins in the first half of the year, helped by greater delivery network density, growth in fee-based fast delivery and automation.
Walmart said 3,100 U.S. stores are now served with some level of automated freight, while more than 50 percent of its e-commerce fulfillment volume is processed through automated facilities.
Walmart’s relationship with robotics company Symbotic is one example of how automation has become increasingly relevant to the retailer’s delivery strategy.
On Symbotic’s third quarter earnings call earlier this month, CEO Rick Cohen said the company’s BreakPack less-than-full-case fulfillment technology, which handles individual items, has begun deployment at half of Walmart’s regional distribution centers.
Symbotic has also started installing a new version of its SymMicro system at the back of an undisclosed Walmart store to fulfill e-commerce orders. The store deployment represents a step beyond the large automated distribution centers that have traditionally defined the Walmart partnership.
Within the system, autonomous mobile robots called SymBots retrieve totes holding goods from storage before bringing them to a pick station where an operator can fulfill multiple orders simultaneously.
Cohen said the new Walmart installation is expected to take about six months to come online, followed by a second site.
The first system is a development stage rather than the final product Walmart would deploy at scale.
“We’re going to overbuild this, but we probably won’t build 400 of the version we’re building now,” said Cohen, referring to Symbotic’s $5 billion contract for the back-of-store technology to be retrofitted into 400 Walmart locations. “When we do the second version, that’s usually what triggers, ‘okay, we want 400 of these.’”
Walmart’s top competition has been stepping up to the plate to bolster faster delivery needs, with Target briefly touching on delivery in its Wednesday earnings call.
The Minneapolis-based retailer said it fulfilled nearly 30 percent more same-day and next-day units than last year. Same-day delivery grew more than 25 percent in the company’s second quarter, which the company said helped propel digital comparable sales to an 8.7 percent jump over the year prior.
Mass merchants aren’t the only retailers putting more investment in same-day delivery.
Earlier this week, Gap Inc. unveiled its Gap and Gap Factory brands will now be available via DoorDash, complementing the partnership forged late last year with sister label Old Navy.
Orders are fulfilled from participating Gap and Gap Factory locations, with assortment, availability, and delivery times varying by location.
With the partnership, DoorDash says it now offers over 500,00 products eligible for delivery in under an hour across categories including apparel, books, baby and kids, household and more.
In the first quarter, DoorDash brought fast third-party delivery within reach for over 60 percent of the U.S. population across more than 22,000 ZIP codes, with a median delivery time of 30 minutes or less.
